A more detailed look at BOE Saunders' remarks

Author: Justin Low | Category: Central Banks

The BOE's main hawk, Michael Saunders, spoke to Bloomberg in an interview


He said that Brexit vulnerabilities may stop the central bank from raising interest rates even if their forecasts imply a need to do so, adding that "a smooth departure from the EU is very uncertain" and that means relatively hawkish projections will have a smaller-than-usual influence on his own immediate policy vote.

Though he clarifies that "it's hard to know how it would play out with any certainty and I wouldn't want to give a strong steer now as to which way policy would go".

It's more of a case that he still sees a possibility of the BOE sticking to its "gradual but limited" rate hike forecast if a smooth Brexit plays out but with the economy in a fragile state it isn't going to be a given.

However, given his long-standing as one of the more hawkish members, his colleagues are probably less optimistic than he is and that says a lot considering how defeated he sounds in the above remarks.

As for more immediate policy decisions, it just means that the central bank has no scope to act until the curtain comes down on the Brexit drama.
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