Bank of England governor highlights relevance of domestic inflation drivers

Bank of England governor Mark Carney used his speech at Jackson Hole to dissert on global and domestic inflation drivers and the policy implications. He presented evidence showing that, notwithstanding the obvious correlation in interest rates, taking into account unconventional measures, effective monetary policies are substantially less synchronised. 

He highlighted the scope for further divergence, as the Fed and the BoE are getting closer to normalising their policies while ECB and BoJ may announce new easing measures, notes Barclays. Similarly, core inflation across countries appears far less correlated than headline inflation, supporting the view that domestic inflation drivers remain crucial for national authorities.