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BOE Saunders Backs Swift Hikes To Neutral Stance

UK
  • Bank of England Monetary Policy Committee member Michael Saunders favours a swift return of the policy rate towards neutral, with inflation risks to the upside. Saunders, who was in the minority voting for a 50 basis point hike at the February meeting, warned of the risks of second round inflation effects from elevated inflation expectations and mounting pay pressures.
  • Headlines included:
    • Vote For 50 Bps Rise Doesn't Mean He'll Back It Again
    • Strength in energy prices likely to boost CPI
    • Energy impact on CPI likely to be temporary
    • CPI could stay above 2% target without action
    • Risks on stronger and more persistent inflation
    • Further modest tightening likely needed
    • Early rate rises may prevent rates rising high
    • Preference is to move quickly on rates
    • U.K. economy has significant excess demand (All BBG)

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