BOE's Saunder says he would hesitate long and hard before giving BOE any say on fiscal policy
BOE's Saunders in testimony to the Treasury Select Committee 11 Oct
- short term ccy volatility should not be a concern to policymakers
- largest part of drop in GBP is due to adjustment of expectations for UK due to Brexit but not sole reason
- dilemma for MPC would be much sharper if inflation expectations and pay growth were to pick up unexpectedly
- mon pol is burdened but not yet over burdened
- BOE is trying to look through ccy impact on inflation
- would expect the MPC to tolerate a modest-ccy driven inflation overshoot in the next 2-3 years
Meanwhile GBPUSD trying to claw its way back above 1.2300 as EURGBP chews through 0.9030 bids/support.
Saunders is the newest MPC recruit and joined days after the new round of stimulus was announced.He voted in September to keep all elements of the package unchanged. In his speech, he said that that while the bank has limited room to cut bank rate further, "substantial scope remains for stimulus through asset purchases."