Comments from BOE super-dove Miles at the Resolution Foundation:
This is Miles' final speech as a member of the MPC:
- The time to start normalization is 'soon'
- Sees new 'neutral' rate at about 3.00% in early 2018
- Time for rate increases is getting closer
- Rate hikes should be gradual
Hawkish stuff from a dove but how much do you read into the comments of a central banker on his way out the door? In any case, GBPUSD ticked a dozen pips higher to 1.5600 on the headlines because there has been a lot of hawkish talk from the BO today.
Miles also spoke in a parliamentary hearing earlier and said there looks to be some light at the end of the tunnel for productivity and that CPI expectations are still pretty well anchored.
- "What strikes me about recent experience when inflation has turned out lower is that people's inflation expectations seem quite anchored 2 or 3 years down the road."
- "We have had relatively weak investment over the last few years, but my view is this is not a long-term downward shift in people's desire to invest, more about being in a deep recession"
- "Within the UK, the low level of interest rates has been a sort of rational response to a very sharp downturn, but to my mind it doesn't tell you that we need very low interest rates really as far ahead as you can possibly look"
- "We're still dealing with the thankfully fading crisis of 2008, and I don't think that's a guide for new normal interest rates"
- "I don't believe for a minute that new normal is near the zero-bound"
