MPC Member Hints At More Imminent Rate Rise - Reports
Monetary Policy Committee (MPC) member Michael Saunders has echoed the Bank of England's (BoE) chief economist's hawkish tone as he suggested the BoE may need to raise rates sooner than expected, according to Reuters.
The newswire reported from a speech given by Saunders yesterday (10 June) at an Institute of Directors' event at Solent University in Southampton.
Current expectations in the financial markets is that the BoE is more likely to cut rates than to raise them over the coming year, according to Reuters, citing global economic contagion from the US/China trade conflict, and a more dovish stance from the US Federal Reserve.
This is in spite of BoE governor Mark Carney saying last month that inflation would likely breach target over the coming years if the Bank failed to raise rates faster than was being priced into markets.
Saunders said yesterday: "We probably would have to return to something like a neutral stance earlier than markets project."
He also added that the MPC does "not necessarily have to keep rates on hold until all Brexit uncertainties are resolved."
UK inflation hits 2.1% but monetary policy remains slave to Brexit
He pointed out that the BoE had raised rates twice since Britain voted to leave the EU, in November 2017 and August 2018.
Saunders' views came after the Bank of England's chief economist, Andy Haldane, wrote in The Sun on Saturday (8 June) that "a small rise in rates would be prudent to nip any inflationary risks in the bud".
The BoE announces its next rate decision on June 20.
Saunders was UK economist at Citigroup from 1990 until 2016, while heading its European economics and its economics teams in Japan and Australia.
He joined Citigroup from Salomon Brothers in 1990 and has been an occasional expert witness on the UK economy for the Treasury select committee.
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