BoE policymaker Michael Saunders warned the markets that their the central bank’s tightening path could be faster then they expected. Saunders is known hawk that started voting for a hike since March meeting. He refers to market pricing of a little bit more than one hike over the next twelve months, and said “if the economy plays out as I expect, it may be that rates need to go up a little faster than that.”
He also laid out his expectations for the developments in UK. On the condition that “Brexit unfolding in sort of a smooth and gradual way”, “the economy will continue to grow at around the pace we have seen over the last couple of years … (I) expect the jobless rate to fall a little further; and pay growth will pick up a bit.”
Against that background, Saunders believed that “rates might need to rise a little faster”. Still he emphasized that “the general picture is still limited and gradual, not too far and not too fast.”
