MNI Brief: BOE Bank Rate At 2% Plus Not Unlikely - Saunders

Further monetary tightening by the Bank of England was likely needed in coming months and Bank Rate could go above 2%, Monetary Policy Committee member Michael Saunders said Monday.

Analysts' forecasts show Bank Rate rising to around 2% in the next year with market pricing higher still. "I do not regard such an outcome (ie that Bank Rate will have to rise to 2% or higher during the next year to return inflation to target) as implausible or unlikely," Saunders said in a speech at the Resolution Foundation.

He highlighted the damage done to the UK supply side by Brexit, Covid, and latterly Ukraine, with trend growth for the next three years forecast at just 1.2% a year.