- Main UK downside risk lies with the consumer
- Raw material rise might lead to slower inflation fall and add to downside risks in UK consumer demand
- If it persists in 2013, outlook will be weaker
- There have been signs of broader momentum loss in the US and China
- BOE estimate of QE impact was ‘not plausible’
- Inflation expectations are important but need to be interpreted in terms of near-term attitudes
- Funding for lending should help expansion of credit flows and effect visible medium-term
- It may well be that interest rates remain lower for longer than expected in the current business cycle
- Eventual rate hikes will depend on inflation outlook and not possible to speculate at the moment how quickly or how far rates will rise
- BOE faces timing issue on unwinding gilts
- Wants to see more evidence of economic situation before any decision on QE
McCafferty replaced Adam Posen on the BOE’s monetary policy committee as an external member back in July
