BOE governor Carney testifies before the Treasury committee
- Guidance BOE gives is conditional on economic outlook
- Households, businesses understand that rates are likely to rise at a gentle pace
- Q1 slowdown likely due to idiosyncratic and temporary factors
- It is right to wait for more data
- Interest rate volatility in short-term markets is very low by historic standards
- Expect to report more on neutral level of UK interest rates in August inflation report
- MPC has had rigorous discussion of publishing interest rate path
- Majority are not in favour
- If BOE published rate path, may feel committed to follow for reasons of credibility
- Even if such a move is no longer economically appropriate
So far nothing too new from Carney. Still brushing aside the weak Q1 data and suddenly the attention has been shifted to the possible publishing of a rate path guidance. Vlieghe is for it, but Saunders and Ramden has so far spoken against it.
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