Bank of England (BoE) Inflation Letter

Bank of England Inflation Letter is published if inflation deviates by more than 1% from the mandated target rate of 2%. In this case, the Governor of the Bank of England is required to write an open letter to the Chancellor of the exchequer and to explain the reasons for the actual situation, as well as measures taken to get inflation back to the target value. The Chancellor is also to write a similar letter to the BoE Governor. The explanatory documents are exchanged publicly.

The Bank of England letter contains a text with an overview of the situation and detailed explanations, illustrated by charts and sheets. Economists and journalists normally pay attention to this publication, as it contains a ready analytical evaluation first-hand, and can suggest a hint on future measures, which the BoE may take to achieve the inflationary target.

Publication of the BoE inflation letter is an indication of unfavorable conditions for the pound sterling. This may have a short-term negative impact on GBP quotes. However, the letter is more an analytical than a strictly informational document. Therefore, even if it causes the pound sterling volatility, such volatility will be insignificant and short-term.