MNI BRIEF: Broadbent Says BOE Could Cut "Over the Summer"

The Bank of England's Monetary Policy Committee could start to cut interest rates "over the summer," Deputy Governor Ben Broadbent said in what is likely to be his final keynote speech on Monday, as he noted in-house research that shows even more than previously assumed of the inflation surge was due to higher core goods prices due to Covid and then the Ukraine war and that effect is fading away with the key remaining question how long second round effects will persist and .

Market pricing suggests June could be a close call with a cut by August probable, but Broadbent 's comments, pointing to a 'possible' summer cut, left the question hanging which month the move will come in.

He noted that the MPC had long-judged that inflation would take longer to unwind than rise, but that the Bank's agents are reporting firms are less confident of passing on cost increases. (see MNI INTERVIEW: BOE Models Can Ditch 2% Inflation Expectations)