Is Inflation Really Dead? Watch the United Kingdom for Clues

Mr Vlieghe, 44, had to give up a long-term incentive plan with Brevan Howard for fear of being seen to have a conflict of interest in his new role deciding the path of interest rates.

At the moment opinions are split. While the labor market is tightening, policy makers are still assessing the impact of the global slowdown on the United Kingdom economy. There is still likely to be a few probing into his personal views on interest rates though which should provide a few insight into whether he intends to continue voting against a rate hike or join his colleague Ian McCaffery in voting in favour.

Sterling weakened versus all but two of its 16 major peers last week after the BOE said in the minutes of its latest policy meeting that there’s scope to keep interest rates low as slow inflation persists.

Despite saying he had no problems with being labelled as a “dove”, Mr Vlieghe did not endorse a move into negative interest rate territory, as posited by the Bank’s chief economist, Andy Haldane. The MPC needs to make the first moves on interest rates before it is too late.

Recent government data show workers are producing more output for each hour of work, which is a gauge of how much earnings for employees can grow without stoking inflation.

“We can cut rates if judge it necessary”, he said.

He said falling inflation was a welcome trend for consumers.

The Belgo-British economist also admitted that the effectiveness of quantitative easing “has declined over time, but that is not to say we do not have tools, just that we have to scale [asset purchases] accordingly”.

Ben Brettell, senior economist at Hargreaves Lansdown, said: “Downside risks to the United Kingdom economy are still numerous”.

McCafferty, who also spoke to parliament’s Treasury Committee on Tuesday, sounded less anxious than Vlieghe about the risks to Britain from the global economy and said the pressures pushing down on inflation were transitory. The BOE said last week that its near- term outlook for inflation had weakened since August and that price growth will probably stay below 1 percent until spring 2016, well below its 2 percent target.

Chinese trade figures have been a source of concern for a few time now, with both dollar-denominated exports and imports having contracted for most of the year when compared to 12 months previous.

“I see them remaining at 0.5 per cent into the second half of next year, and quite possibly even longer than that”.