The Bank of England governor says low inflation is temporary and will return to its 2% target within two years.
“What’s important is that workers and businesses understand this is a temporary phenomenon,” Mark Carney told MPs.
He said the nine-strong Monetary Policy Committee would “bring it back to the target in a reasonable horizon”, which he said would be within two years.
Inflation stood at 0.3% in January, well below the Bank’s 2% target.
The figure marks the lowest rate of UK Consumer Prices Index inflation since estimates of the measure began in 1988.
Mr Carney said that three-quarters of the current weakness in inflation was due to falling prices of oil and food, which he said was a “temporary, one-off development”.
He also said there was no evidence of “deferred consumption” – in other words, people putting off purchases in the belief that prices could fall further, a potential threat to economic growth.
