- Energy prices are pushing up prices in the short term but have medium term disinflationary impact
- BOE needs to balance energy impact against any 2nd round effects
- I would expect that bank trade counter at 3% over 2023 reduce output further below potential
- policy will likely have to loosen in 2024 to try to prevent inflation falling below target
- policy should focus on inflation , not offsetting losing guilt yields or FX rates
- most of the impact on demand of tighter bank trade yet appear
- my main rationale for further tightening of monetary policy last week was risk management
- BOE needs to guard against over tightening policy
- it is too early to judge whether the labor market will loosen as forecast by the Bank of England
- UK demand likely to fall even if energy prices fall back
- initial signs and UK labor market is starting to loosen
- UK likely to be in recession in Q4, mostly due to lower real incomes.
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