VOT Research Desk
In a scheduled appearance on Thursday, Bank of England (BoE) Deputy Governor Dave Ramsden stated, my preference is for additional tightening, but it depends on the economy.” I am acutely aware that our actions are exacerbating the hardships that the current situation is causing homes.
The MPC must take the appropriate monetary policy steps to restore inflation to 2%. When it comes to policymaking, I prefer a cautious and responsive approach. Although my preference is for additional tightening, if the economy develops differently, I would explore the case for lowering the bank rate.
It’s encouraging to see both survey and market-based inflation expectations have dropped. The UK fiscal tightening is expected to have little influence on the forecast. I am less convinced that unemployment will reach 5% in 2023.
The government’s autumn statement will have a negative impact on activity and inflation. I anticipate that more hikes in the bank rate will be required. It is possible that inflation will fall faster in 2023.
Higher interest rates may take longer to take effect and have a greater impact. The Pound Sterling is little influenced by the BOE policymaker’s words, remaining in the 1.2075 region and up 0.18% on the day.
