MNI BRIEF: BOE Sees Stickier Inflation Than Markets - Ramsden

Bank of England Deputy Governor Dave Ramsden pushed back against the view that policy rate cuts will come soon, saying the Monetary Policy Committee saw a greater chance of more persistent inflation than markets are currently assuming, echoing comments on Monday from Governor Andrew Bailey.

Ramsden told the Treasury Select Committee Tuesday that the divergence between market views and the Bank's was due in part to the fact that "We are more worried about inflation persistence ." He told the TSC that one reason for pessimism that inflation would keep falling swiflty was that "we are a bit more pessimistic about the supply side."

Markets have been pricing in a rate cut as early as Spring next year but BOE executives have been pushing the line that the policy rate will have to stay restrictive for an extended period.

Ramsden also stressed that quantitative tightening was having only a marginal impact on effective interest rates -- around 10 to 15 bps of all policy tightening -- and that the big effects on mortgage and other rates came from the hikes in the policy rate and international developments, such as concerns over increased US debt supply.