BoE’s Pill: We Have Done A Lot On Interest Rates
Speaking on inflation and the policy on Monday, Bank of England (BoE) Chief Economist, Huw Pill, said that “we have done a lot on interest rates.”
Additional comments
If we have a persistent component of inflation, we will need a persistent monetary policy response.
Not all wage indicators are pointing the same way right now.
Average weekly earnings data is increasingly looking like an outlier.
REC labor market data looks like an outlier in the other direction.
If we look at market inflation expectations, we cannot be complacent.
We must not declare premature victory after a mechanical fall in headline inflation.
I think more of BoE rate rises has been transmitted than 20-25%, but not dramatically so.
I personally feel markets have become a bit too short-term in looking at data impact on BoE rates.
Market reaction
GBP/USD is paring back gains in response to the dovish comments, trading at 1.2158, at the time of writing.
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