MNI BRIEF: BOE Tenreyro Sees Earlier, Faster Rate Reversal

Reversing the Bank of England's policy tightening will need to be done sooner and more rapidly than previously envisaged, Monetary Policy Committee member Silvana Tenreyro posited Tuesday, noting private sector wage growth was falling sharply and the UK terms of trade improving rapidly.

Tenreyro, who opposed the March rate hike, noted that global supply chain indices and shipping costs had returned to pre-pandemic levels while energy futures had dropped back and this will feed through into a rapid fall in inflation, which in turn will ease pay pressures.

Against this backdrop, she expects "that the high current level of Bank Rate will require an earlier and faster reversal, to avoid a significant inflation undershoot." In other remarks, Tenreyro, who has left the door open previously to backing a rate cut, downplayed the importance of quantitative easing and tightening, saying that she outside of periods of market dysfunction she believed it had only small and temporary effects on yields.