MNI BRIEF: Scale of Hikes Linked To Fiscal Policy - Broadbent

Bank of England Deputy Governor Ben Broadbent on Thursday linked the scale of rate hikes that the Monetary Policy Committee will sanction to fiscal policy, with a new Budget set to be unveiled on October 31 before policymaker's November meeting. He said that import costs have driven headline inflation higher and "if government support mitigates that effect, there is more at the margin for monetary policy to do. The MPC is likely to respond relatively promptly to news about fiscal policy."

Broadbent left the question hanging as to whether the MPC will have to hike as much as markets have been pricing in, with current expectations centred on a 100 bps rise in November.

The signals coming from Whitehall suggest that the Budget will look to close much of the estimated GBP70 billion gap required to get debt as a share of GDP on to a declining path.