Q&A from BOE Bailey
Highlights from the Q&A from BOE Bailey and the members of the MPC
- Reduction balance sheet is not a substitute for higher interest rates
- Useful to have a predictable path for reversing QE
- If we stuck with 1.5% threshold for reversing QE, that would be tantamount to saying we were never doing it
- We expect equilibrium interest rates to be very low for foreseeable future
- we will use the bank rate has the active tool
- Ramsden: 0.5% threshold for stopping guilt reinvestment is a more automatic threshold than the 1% for selling guilt
- News on inflation is growing number of supply bottlenecks. We've also seen more evidence of labor vacancies since June
The GBPUSD is steady through the decision and the pressers so far (8:25 AM ET). The price is trading just above its 100 day moving average at 1.39194. The 100 hour moving average is below at 1.3908. The 200 hour moving average is below at 1.39937. As long as the price can stay above those moving average levels, the bias remains tilted more to the upside. The they are still remains within the narrow week trading range which has a low at 1.38712 and a high at 1.39565 (or about 85 pips - very narrow for the week).
- Difference on MPC is not one of fundamental view on stance, but interpretation
- we have not had a financial stability problem through Covid, nor anywhere around the world
- it is not useful to think of effective lower bound as a single number
- if economy suffers negative shock after BOE starts to reverse QE could restart QE,
- cannot precisely define what a modest tightening of policy would be
- Delta variant has contributed to slight flattening of growth path
- We are highly focused on import prices
- Broadbent: breakeven measures of inflation have been pretty stable, the most important measure of inflation. Brexit effect on prices are likely to be much smaller than global Covid FX
The press conference concluded at 13:04 PM GMT/9:04 ET.
