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BoE Pill: A significant and necessary monetary policy response in November

BoE Chief Economist Huw Pill said in a speech, “on the basis of the fiscal easing announced last week, the macroeconomic policy environment looks set to rebalance. Taken in conjunction with the macroeconomic impact of ensuing market developments, it is hard to avoid the conclusion that the fiscal easing announced last week will prompt a significant and necessary monetary policy response in November.”

The MPC forecasts will be the “vehicle” for making ” necessarily comprehensive assessment” on recent developments. The assessments will “embody recent evidence of weakness in economic activity, as well as the impact of the Government’s Energy Price Guarantee on headline inflation and wage and price setting behaviour.” They will factor in “the evolution of international commodity prices, not least developments in wholesale natural gas markets” and “impact of the Government’s Growth Plan and other fiscal announcements in detail.”

As for the gilt interventions announced by BoE this week, Pill emphasized it’s a “temporary and targeted financial stability operation”. It was “not a monetary policy operation”.

Full speech here.

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