BOE's Bailey: If outlook for inflation weakens, MPC will take whatever action necessary

Author: Adam Button | Category: Central Banks

Bailey's press conference:

  • Outlook remains unusually uncertain for economy
  • We will move to the future with multi-dimensional choices on what tools to use
  • On negative rates, there are a range of views on MPC on how PRA should respond
  • Economic outlook risks have become more two-sided
  • It's not easy to reach a firm view on how much UK households will release savings built during the pandemic
  • Don't take any signal from negative rate preparations
  • Q4 GDP numbers have turned out stronger than expected
  • My message to markets is don not read future MPC decisions based on toolbox moves
  • We haven't talked about the lower limit for the reversal rate
  • Bailey: It appears there is very high leverage among retail investors in the US and elsewhere
  • Retail brokerage platforms have to be ready for margin calls
  • We are now working on question of how we would structure a bond portfolio to achieve climate objectives
Gilt yields are above 1% for the first time since Nov and sterling is at the highs of the day.

Ramsden:
  • We are very much on track to complete QE programme by year-end
  • We do need to slow the pace of QE purchases at some point
There are a handful of hawkish takeaways from the Bank of England today. There's been a clear walk-back from negative rate talk as the economy weathers the pandemic better than anticipated.

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