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MNI BRIEF: Fast Hikes May Mean Less Needed -- BOE MPC Saunders

(MNI) London
(MNI) London

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%.

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
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MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
Bank of EnglandCentral Bank NewsPolicy NewsHomepageCEEMEAPolicy StoryBank Of England (BOE) Market NewsBriefUKStoryRegion
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