MNI BRIEF: Rate Hike Impact Slower Than Expected - BOE Ramsden

The impact of Bank of England rate hikes has been slower to feed through than expected and inflation pressures are more persistent, Deputy Governor Dave Ramsden said at a Q and A following a Threadneedle St speech.

Ramsden also said that he wanted to shrink Bank Reserves down to banks' desired levels, which a Bank survey put in a GBP320 to GBP480 billion range but he stressed the need for caution while expressing confidence that the pace of quantitative tightening could be increased.

"Because of what has happened with the move to fixed rate mortgages in the UK it is taking quite a bit longer than we thought for the impact of the Bank Rate increases that we have seen to come through," he said, adding that the "really large increases in Bank Rate only started a year ago."

Ramsden said that while headline inflation in Wednesday's June data put it back in line with the Bank's most recent forecasts the indicators the Bank looked at for evidence of inflation persistence were higher. He also noted that the markets sharp reactions to recent data, such inflation and labour market figures, "made sense from my perspective" as the Monetary Policy Committee had stressed it was looking at these in setting policy.