MNI BRIEF: Main Risk Is UK Has Over-Tightened - BOE Tenreyro

The UK is at greater risk of having been overly aggressive in hiking rates than having not done enough to offset higher inflation, Bank of England Monetary Policy Committee member Silvana Tenreyro told a New York Federal Reserve event on Friday.

Tenreyro, who opposed the MPC's 50 basis point hike in February, opening the door to possibly backing a rate cut, said that the most likely scenario for the UK now was that it would undershoot its 2.0% inflation target in the medium-term as the lagged effects of the sharp policy tightening feed through.

"The main risk for the UK is we have over-tightened," she said, highlighting the weakness of UK consumer demand compared to the US and noting how heavily the UK's terms of trade shock has been. The MPC's modal, or most likely, forecast in the February Monetary Policy Report showed inflation falling well below target although the risks were skewed heavily to the upside.