Here's the key part of today's speech, which was just published:
We have been clear that we see the balance of risks to inflation as on the upside. Here, I would pick out the risks from domestic price and wage setting, and this explains why at the MPC’s last meeting we adopted language which made clear that if we see signs of greater persistence of inflation, and price and wage setting would be such signs, we will have to act forcefully. In simple terms this means that a 50 basis point increase will be among the choices on the table when we next meet. 50 basis points is not locked in, and anyone who predicts that is doing so based on their own view. We do not pre-announce Bank Rate decisions for the very simple reason that MPC decisions are based on deliberation at the time among nine people focused on returning inflation to the 2% target sustainably.
Last week, Bailey said options other than 25 bps hikes are on the table and that inflation should come down rapidly next year.
- It is also time for the MPC to discuss the strategy for beginning to sell the gilts held in our Asset Purchase Facility portfolio
- We will publish, alongside the Monetary Policy Report, more detail on how we will do this [in Aug]
- We are currently looking at a total reduction in the stock of gilts held by the APF, which covers both sales and gilt redemptions, of something in the region of £50‐100bn in the first year
- The Russian shock is now the largest contributor to UK inflation by some way
- I think we can already see the effects, with the economy slowing
- My sense of the latest data is that the supply chain/goods shock has started to ease, but the Russian impact – particularly on natural gas prices in Europe is going the other way as we look ahead to the winter
- Full text
Cable briefly edged above the highs of the past two days on these comments:
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