MNI BRIEF: BOE Breeden Backs Gradual Easing, Upside Risks Ease
MNI (LONDON) - Bank of England Deputy Governor Sarah Breeden said Thursday that she supported the case for gradual easing of policy, with the risks of elevated inflation becoming entrenched having eased.
In a speech at Edinburgh University said that a year ago she was most worried about inflation persistence becoming entrenched but "the risks of that upside scenario has now subsided sufficiently to be no longer a core consideration" and her focus now was on how swiftly policy can be ased.
She said there were tentative signs that economic activity was beginning to ease and "the recent evidence further supports the case to withdraw policy restrictiveness and I expect to continue to remove restrictiveness gradually over time." She noted the uncertainty over where the neutral rate, 'R star', is and instead backed a cautious approach to easing. Breeden backed no change in December with markets expecting the Monetary Policy Committee to ease again by 25 basis points in Feb.