BoE MPC member Silvana Tenreyro said, “I would expect that Bank Rate held at 3% over 2023 would reduce output further below potential, given the effects of lower real incomes and the lagged impact of the tightening to date.”
“Policy would then have to loosen, perhaps in 2024, to try to prevent inflation falling below target,” she added.
“Monetary policy has tightened significantly this year, but most of its effects on demand have yet to occur,” she said. “Too high a path for Bank Rate therefore risks over-steering inflation below target in the medium term.”
Tenreyro is a known dove, who voted for just a 25bps hike at last meeting, while the majority voted for a 75bps hike.
