Carney testifies at a Parliamentary Committee in London along with McCafferty, Weale and Forbes:

  • Carney: wage growth just starting to pick up
  • There is reason to believe that growth in China might be more volatile than stats suggest
  • Broader indicators (and official ones) indicate a slowing in the Chinese economy
  • Downside risks to Chinese growth have risen
  • There seems to be some element of smoothing in Chinese data
  • MPC is more pessimistic on China than consensus
  • BOE tightening is likely to be longer and shallower than in the past
  • UK economic momentum 'solid'
  • Unit labor cost growth was likely to have been only around 1.25% in the second quarter of 2015
  • After conversations with Chinese officials in past two weeks, he had no doubts about the intention to maintain pace of financial reform
  • We see the economy using up excess capacity within a year and going into an excess of demand
  • Current account deficit is not currently material now
  • Pound strength is important factor for inflation

McCafferty:

  • Worried about domestic inflation risks
  • Upside inflation risks have increased
  • Sees limited impact from China turmoil on UK
  • Manufacturing may have slowed over the Summer due to sterling and overseas weakness
  • BOE intends to raise rates before selling QE gilts

Forbes:

  • UK inflation soon to begin journey back toward target
  • My reading on the labor market suggests there is very little slack, if any
  • Low UK inflation is unlikely to last

Weale:

  • China is a risk, not having a clear downside forecast
  • Productivity is key to his rate hike view
  • Potential for downside CPI risks a reason for caution
  • Strong growth in real incomes is likely to be main force driving UK economy

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