Bank of England rate policy 'risks higher inflation'

The Bank of England's expected new policy of forward guidance risks increasing inflation, a leading expert has warned.

Forward guidance is expected to see the Bank pledge to keep interest rates low for an extended period of time.

New governor Mark Carney is expected to announce policy details in August.

But this could risk inflation running higher than the Bank's 2% target, says Prof Michael Woodford of the University of Columbia.

The Bank of England's target for CPI inflation is 2%, but it has been above that figure since December 2009. The latest figure, for June, was 2.9%. 

Read more... 'A little dangerous'