BoE MPC member Michael Saunders said yesterday, “the economy is in significant excess demand, and inflation expectations are not as well anchored as I would like.”
“My preference is to move quite quickly towards a more neutral stance in order to prevent the recent trend of higher inflation expectations and rising pay growth from becoming more firmly embedded,” he said.
However, he emphasized that his vote for 50bps hike in February “does not necessarily imply that I would vote for a 50 basis-point hike in the event that further tightening is required.”
“All else equal, the case for policy to move in a larger step probably is greater when Bank Rate is clearly further away from the approximate level that, if maintained, would return inflation to target and keep it there,” he added.
