Bank of England's Haldane speaking with Tenreyro at reappointment hearings

Bank of England's chief economists Andy Haldane and BOE monetary policy committee member Silvana Tenreyro are speaking to the treasury reappointment committee.

Haldane remarks :

  • inflation should pick up next year
  • greater than usual uncertainty in Outlook
  • long-term economic scarring inevitable
  • the main challenge over the next 3 years for theMPC is likely to continue to be assessing the ongoing effects of the Covid crisis
  • inflation is likely to fall further in the 2nd half of the year in part due to effects of ongoing weaker demand
  • possible a higher long-term equilibrium rate of unemployment could cause the earlier reemergence of wage pressures
  • there is a risk unemployment could rise sharply to levels last seen in early 1980s
  • there is potential for scarring effects in the labor market
  • reviewing and doing negative rates are quite different things
  • there is also work underway on other potential instruments available to the MPC for example further rounds of QE, credit easing policies and forward guidance
  • overall consumer spending has recovered somewhat sooner, and materially faster than in the banks may scenario

Tenreyro written remarks:

  • I do not see monetary financing dangerous in the context of the Bank of England or recent policy actions of the MPC
  • recent BOE actions pose no risk of monetary financing
  • main operational challenges relate to policy tools
  • MPC as some policies base available in the near term
  • shock could accelerate existing technological trends