MNI BRIEF: BOE Tenreyro Sees Bank Rate At Pre-Crisis Level

Bank of England Monetary Policy Committee member Silvana Tenreyro said Wednesday that she envisaged that Bank Rate, currently at 0.1%, would at some point return to its pre-Covid crisis level.

Bank Rate was at 0.75% before Covid struck but markets have been pricing in a move by the autumn to just above 1.0%. Speaking at an Oxford University Economic Society event Tenreyro said "Directionally ... I would expect a modest tightening to restore inflation to target," adding that there were "pros and cons" over whether the first hike should come in December or February.

Tenreyro said that looking to the medium term "I see a progression to higher rates but perhaps going back to where we were just before the crisis struck." The Bank's November forecasts suggested that market rate expectations were overblown if the economy evolved as the BOE expected.