MNI BRIEF: Inflation Risks No Longer To Downside - BOE Ramsden
MNI (LONDON) - Bank of England Deputy Governor Dave Ramsden on Friday backed a cautious approach to policy easing, saying that he no longer thought the risks to hitting the 2% inflation target were to the downside, while leaving the door open to a faster pace of cutting if justified.
Ramsden, speaking in South Africa, said that although headline inflation was expected to peak around 3.7% later this year the MPC had made the key judgement that the rise in headline inflation would not feed through to additional second round effects on domestic price pressures, in part because of the relative loosenss of the labour market but uncertainty around the labour market was high. (see MNI INTERVIEW: BOE Risks Repeating Pandemic Errors- Sentance )
Ramsden, who moved ahead of the majority in supporting rate cuts, said that he still placed weight on a scenario under which weaker demand combined with a loosening labour market could open up excessive slack but there were more inflationary scenarios as well. Comparing policy easing to descending a mountain he said "A gradual and careful approach is always needed on the way down ... but there will also be times when conditions require that the pace has to quicken."