- There are dollar specific factors at work, with regards to weak currency
- Fed is much more focused on bringing demand shock under control
- But there is a UK story too behind sterling weakness
- Inflation target is very important for the UK
- Confident that BOE will respond to price shock
- Policy review is not a recognition that BOE regime is failing
Pill, Mann, Tenreyro:
- Expects headline inflation to decline in the short-term
- Inflation impact of future fiscal stimulus depends on details
- More forceful bank rate moves open door for policy hold or reversal later
- Still to see majority of the impact of significant policy tightening already in place
Another common element in the remarks is that policymakers are pointing to fiscal policy help to bolster economic conditions. However, they are pointing out that the details have to be made clear as it is important for that to be the case when assessing the impact - especially on inflation.
Well, they're not exactly wrong. Liz Truss' plan to freeze energy bills was initially set to cost around £130 billion but there are widespread reports indicating that the true cost could reach around £200 billion. And the specifics are yet to be finalised as well, making it tough for policymakers to read into it.
That said, it may not matter too much when inflation is already surging above double-digits in the UK now perhaps.
