(Bloomberg) -- Bank of England officials brushed aside suggestions that the economy is about to suffer from higher inflation anytime soon as it struggles with the fallout of the coronavirus pandemic.

Answering questions from lawmakers on Wednesday, policy makers said data monitored by the central bank don’t show evidence of inflation overshooting its 2% target.

A surge in household savings under lockdown has fueled speculation of a rapid increase in consumer demand as the government starts to unwind virus restrictions next month. Economists anticipate inflation to accelerate this year, driven by energy prices and the expiry of a sales tax cut for the hospitality industry in April.

But BOE officials were cautious about the strength of the recovery, noting they expect a contraction in the first quarter and risks of the crisis leaving scars on the labor market. The annual pace of consumer price inflation bottomed out at 0.2% in August and was 0.6% in the most recent month, still well below target.

“I don’t see any evidence across the piece that inflation expectations have moved to levels that would worry us in terms of the inflation target,” Deputy Governor Ben Broadbent said.

The comments suggest the BOE is unlikely to tighten monetary policy in the face of a temporary spike in consumer prices. Minutes of the bank’s last meeting said the committee “does not intend to tighten monetary policy until there is clear evidence that significant progress is being made eliminating spare capacity.”

What Bloomberg Economics Says...

“We expect elevated unemployment to push inflation back below target in the first half of 2022. That’s likely to prevent the BOE from taking a hawkish turn this year.”

-- Dan Hanson, senior economist. Click here for full INSIGHT.

Jonathan Haskel, another member of the bank’s Monetary Policy Committee, pointed to a survey that showed that 70% of respondents intend to hold onto the savings they build up in the pandemic.

Governor Andrew Bailey said the economic impact of the government’s plan to ease restrictions is broadly consistent with the latest BOE forecasts. He added that he had no concerns about inflation in the U.S., where President Joe Biden is pushing for a massive stimulus program.

Gross domestic product shrank about 10% in 2020 and is set to contract at the start of this year. The central bank expects that to be followed by a 5.2% expansion in the second quarter and 4.6% in the following three months.

Read More: Britons Saved on Record Scale During Coronavirus Lockdown

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