LONDON (Reuters) – The Bank of England looks set to become the first of the world’s major central banks to raise interest rates from their record pandemic low, possibly as soon as Thursday.
But there are differences among the nine members of the Monetary Policy Committee about how urgently the BoE needs to respond to growing inflation pressures.
The MPC is due to announce its latest policy decisions and forecasts for the economy at 1200 GMT on Thursday. It also has scheduled policy announcements on Dec. 16 and Feb. 3.
APPARENTLY READY TO ACT
ANDREW BAILEY, GOVERNOR
Oct. 17: “Monetary policy cannot solve supply-side problems but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations. And that’s why we at the Bank of England have signalled, and this is another such signal, that we will have to act.”
MICHAEL SAUNDERS, EXTERNAL MEMBER
Oct. 9: “I’m not in favour of using code words or stating our intentions in advance of the meeting too precisely. The decisions get taken at the proper time. But markets have priced in over the last few months an earlier rise in Bank Rate than previously and I think that’s appropriate.”
HUW PILL, CHIEF ECONOMIST
Oct. 21: The MPC’s decision was “finely balanced” and “I think November is live.”
“The big picture is, I think, there are reasons that we don’t need the emergency settings of policy that we saw after the intensification of the pandemic.”
SOUNDING WORRIED ABOUT INFLATION PRESSURES
DAVE RAMSDEN, DEPUTY GOVERNOR (MARKETS & BANKING)
Sept. 8: “Although I see risks on two sides … at the margin I am slightly more worried about inflationary risks.”
BEN BROADBENT, DEPUTY GOVERNOR (MONETARY POLICY)
Sept. 8: “I was on the side of thinking that these conditions had been met,” referring to the minimum conditions the MPC had set for considering tighter monetary policy. Broadbent said the focus should be on the medium-term outlook.
LESS WORRIED ABOUT IMMEDIATE INFLATION THREAT CATHERINE MANN, EXTERNAL MEMBER
Oct. 14: “(Investors) see that monetary policy normalisation is the direction of travel … and so they are doing their homework and they are starting to price in that direction of travel. This means that there’s a lot of endogenous tightening of financial conditions already in train in the UK. That means that I can wait on active tightening through a Bank Rate rise.”
SILVANA TENREYRO, EXTERNAL MEMBER
Oct. 25: “Uncertainty over the effects of the furlough scheme should be resolved over the coming months, which should help paint a clearer picture of the position of the labour market.”
NOT SPOKEN ON MONETARY POLICY RECENTLY
JONATHAN HASKEL, EXTERNAL MEMBER
July 19: “In the immediate term, the risk of a pre-emptive monetary tightening curtailing the recovery continues to outweigh the risk of a temporary period of above-target inflation. For the foreseeable future, in my view, tight policy isn’t the right policy.”
JON CUNLIFFE, DEPUTY GOVERNOR (FINANCIAL STABILITY)
July 14: “One shouldn’t expect the reopening of the economy to be smooth. This is not something that you can just close down and reopen without bumps in the way … We’re seeing a surge in demand. We’re seeing some constrictions in supply that’s driving inflation. How persistent is that (is the) clear question… We would expect some of these pressures, and we would expect transitory pressures at this stage.”
(Writing by William Schomberg, editing by David Milliken)
