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Free AccessMNI BRIEF: Fast Hikes May Mean Less Needed -- BOE MPC Saunders
Larger rate UK hikes now may help cap overall tightening and that current market expectations of where Bank Rate will end up may be overblown, Bank of England Monetary Policy Committee member Michael Saunders said Monday.
Saunders, who voted with the minority for a 50 basis point hike at the May meeting, told a Resolution Foundation event that quicker tightening, by weighing on inflation expectations, pay growth and firms' pricing, "might help limit the overall tightening cycle." He added he would not necessarily keep advocating 50 bps hikes and that once the policy rate neared neutral the case for rapid increases would diminish, noting the "case for policy to move in a larger step is probably greater when Bank Rate is clearly below neutral."
The MPC hiked Bank Rate to 1.0% at its May meeting with market rate expectations at the time suggesting it could well head to over 2.0%.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.