MNI BRIEF: BOE Bailey Foresees More Tight Policy Decisions

Bank of England Governor Andrew Bailey, at an IIF event, said that following the 5-4 Monetary Policy Committee vote to leave policy unchanged at 5.25% forthcoming decisions would also be tight with uncertainty over how policy is being transmitted a key factor.

The BOE head said that in the last few months there was evidence of "solidprogress" being made in tackling inflation but that there was "anawfullotstilltodo" and that the popularity of fixed rate mortgages in the UK had put uncertainty over policy transmission at the heart of the debate.

He noted the rise in popularity of short-term, two and three year fixed, loans and the changes this implied for policy transmission compared to a time when variable rate mortgages were more popular and judging how policy feeds through "is going to be critical," he said. The current UK economic outlook is "very subdued", Bailey noted, adding that the hardest part in driving inflation back to target would be "the last mile."