Remarks by BOE policymaker, Jonathan Haskel

  • Very low interest rates are unusual, a response to the pandemic
  • Gradual increase in rates would be a return to normal
  • It would show the UK economy is returning to strength
  • Expects much variation in inflation to be transitory
  • Latest data indicates a tight labour market, putting upward pressure on wages
  • But inflation from higher wages need to be matched with productivity
  • So the BOE has to be vigilant on that matter

The headline remark is trying to justify any rate hikes at this point in time as being not an anomaly but part of some consequence resulting from the pandemic.

In this instance, he's relating it to supply issues leading to a surge in inflation pressures.

I mean he's technically not wrong but then again, rate hikes aren't exactly the right tool to deal with the root of the problem. As BOE governor Bailey pointed out back in September, monetary policy can't produce computer chips nor can it produce wind.

The other remarks by Haskel are as you would expect, not really giving much away going into the December policy meeting.