Comments of BoE hawk Michael Saunders suggest that he won’t be pushing for rate hike for now. He said in a Bloomberg interview that “the economy right now is clearly not overheating — the underlying pace of growth, stripping out all of the funny effects, inventories, car shutdowns and so forth, is weak and below trend”. Thus, “the link from the forecast to my actual vote was quite loose.”
He added, the most recent “forecast of excess demand and above-target inflation didn’t at that point prompt me to vote for higher rates”. And, “what you get then is a tension, a disparity, between the forecasts and the actual policy vote.”
Regarding policy reaction to Brexit on October 31, he reiterated the central bank’s stance that response wouldn’t be automatic. “It’s hard to know how it would play out with any certainty,” he said. “I wouldn’t want to give a strong steer now as to which way policy would go.” Nevertheless, no matter what the BoE does, “monetary policy could not prevent a no-deal Brexit being painful for the economy, for businesses and for households.”
