MNI BRIEF: BOE MPC Divided, But Not Over Inflation Transience

Bank of England Monetary Policy Committee members have rejected the idea that they were split over whether inflation was transitory or permanent, with Jonathan Haskel, who voted in the minority for a 50 basis point hike at the February saying that the labels were unhelpful.

Both Dep Gov Ben Broadbent and Silvana Tenreyro defended the idea that the current inflation shock was transitory, by textbook definitions, but took the view that this did not preclude dealing with higher inflation through tighter monetary policy. Transitory shocks dissipate before policy can have its peak impact, which takes 12 to 18 months. "The shocks that we are facing are still transitory in the sense that they are not permanent but they are slightly more persistent and monetary policy can do something about that," Tenreyro said.

Haskel said he had backed faster tightening because he was concerned over forward looking survey evidence showing that firms had raised their price expectations and their expectations of where wages settlements to something over 4% rather than taking a view on whether high inflation was "permanent."