BOE's Ramsden says weak productivity remains a key consideration of monetary policy

Author: Mike Paterson | Category: Central Banks

BOE MPC's Ramsden out with scheduled speech 23 Feb

Nothing directly on interest rate hikes but maybe a Q&A to come so will stand poised.

Productivity rose in latest UK labour report fyi.

GBPUSD currently heading back up to test 1.4000 but not related to this post particularly.

  • Structural shocks to the economy from Brexit can't be offset by monetary policy
  • MPC views weakness and uncertainty of UK productivity as a key consideration for monetary policy
  • Pace of productivity influences what happens to inflation
  • Most recent data show signs of productivity growth rising in the second half of 2017
  • Still no confirmation that productivity pickup is sustained in the near-term
  • UK business investment has been unusually weak relative to past recoveries
  • MPC's judgement is that productivity growth will settle at just over 1% over the next three years
  • MPC's view is that the economy's speed limit is likely to be around 1½%
  • There are significant risks in both directions to the outlook for productivity
  • Naturally lower productivity growth, and dampening effect of Brexit are risks to productivity
  • A clearer transition path and future trading arrangements post-Brexit, could reduce uncertainty
  • Latest evidence from Bank's Decision Maker Panel Survey suggests impact of Brexit holding back business investment growth may be less in 2018 than 2017
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