Bank of England (BoE) Chief Economist Huw Pill said on Friday that they need to question whether the recent pace of rate cuts is sustainable if price and wage-setting behaviour changes, per Reuters.
Key takeaways
“Disinflation is showing ongoing progress.”
“Monetary Policy Committee (MPC) overall believes UK monetary policy is still restrictive.”
“There is some shift in the balance of risks on inflation.”
“At the margin, there has been an upward shift in inflation risks for 2-3 years’ time.”
“There is a risk of spillover into more persistent inflation.”
“Weaker labor market is acting as an offsetting factor.”
“When inflation is high due to external forces, we need to be aware of risk they might affect domestic price-setting.”
Market reaction
These comments received a hawkish score of 7.2 from FXStreet BoE Speech Tracker. Nevertheless, GBP/USD showed no immediate reaction and was last seen trading flat on the day at 1.3440.
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