Comments from BOE officials at a Treasury Committee
Bailey:
- Persistent of covid means there has not been the expected rebalancing of demand between goods and services, pushing inflation higher than expected
- We do not think inflation will be persistent
- We think it is unlikely that commodity prices will continue to rise
- We expect supply chain bottlenecks to sort themselves out
- Market curves point to some increase in interest rates
- MPC members were split in August 4-4 on whether the minimum conditions were met to raise interest rates
- When BOE stops reinvesting in gilts, we would want it to have little or no impact on yields
Ramsden:
- Central view in BOE forecasts is that inflation will be transitory
- Coming increase in inflation is likely to be transitory
- I put more weight on inflationary than deflationary scenario
- I voted with the majority but I will be monitoring the data
- Says he's slightly more worried about inflation risks but comfortable continuing with current QE program
Tenreyro:
- I agree with the central view on inflation
- As long as there are no broader second-round effects, responding to higher prices now would cause undesirable volatility
- It should be possible to begin unwinding QE earlier
Broadbent:
- Labour market pressure on inflation could persist
In these comments and others from central bankers there's a growing sense of worry about bottlenecks and the slow pace that they're resolving.
