LONDON (Reuters) – The Bank of England is weighing up whether to raise interest rates for the 13th meeting in a row next week as it continues to grapple with one of the highest inflation rates among the world’s big, rich countries.
Investors think it is a near-certainty that the BoE will announce a rate increase of at least a quarter-percentage point on June 22, taking Bank Rate to 4.75%, and a roughly 20% chance of a half-point rise to 5%.
Following is a summary of recent comments by members of the Monetary Policy Committee.
MPC MEMBERS WHO VOTED IN MAY FOR A 25 BASIS-POINT HIKE
ANDREW BAILEY, GOVERNOR
June 13: “We still think the rate of inflation is going to come down, but its taking a lot longer than expected.”
He said British food price inflation had been slower to drop than global commodity prices, despite past reassurances from the Bank’s contacts in the retail industry that prices would fall. “We’ve been told for some time, you know, they’ve reached their peak, they’re going to come down, the rate of inflation is going to come down. And then the contacts come back and say ‘Sorry, we got that one wrong.'”
May 23: On interest rates, he said: “I can’t tell you whether we’re near to the peak, I can’t tell you whether we are at the peak. I think we are nearer to the peak than we were.”
BEN BROADBENT, DEPUTY GOVERNOR
May 11: “A lot of … global prices are declining.”
“And we expect for that reason predominantly – so independently of the rate of unemployment – (that) that will bring down wage growth.”
DAVE RAMSDEN, DEPUTY GOVERNOR
May 18: “There is more of a concern (among investors) about persistence of inflation (in Britain) and therefore an expectation that our short-term rate – set by us – will be higher. That feeds through into yields”
JON CUNLIFFE, DEPUTY GOVERNOR
Has not commented on monetary policy in recent months.
HUW PILL, CHIEF ECONOMIST
May 12: He said there was evidence of a “more favourable pattern in terms of the inflation outlook” but “there may be more work to do.”
“To the extend that we see elements of greater persistence, there may be scope, at least to continue with the tightening of policy we have at the moment.”
“If we were to see more evidence that inflation is falling and most inflationary pressures are easing … then the outlook for interest rates would be different.”
CATHERINE MANN, EXTERNAL MPC MEMBER
June 12: She said central banks like the BoE could find it hard to communicate the end of their rate-tightening cycle. “Fine-tuning is something that monetary policy is not very good at if the ultimate objective is to focus on inflation.”
“I called it the policy boogie … you hike, you cut, you hold and you’re just kind of giving signals that are hard to determine and hard for the market to understand why you’re doing it.”
“Inflation expectations, in fact, are on the downswing even as some of these core and services prints have been more robust than we would have hoped for.”
JONATHAN HASKEL, EXTERNAL MPC MEMBER
June 12: He said the BoE is “closely monitoring” indicators of inflation momentum and persistence, in an article for the Scotsman newspaper. “My own view is that it is important we continue to lean against the risks of inflation momentum, and therefore that further increases in interest rates cannot be ruled out.”
May 25: “I prefer to lean against the risks of inflation momentum. As difficult as our current circumstances are, embedded inflation would be worse.”
MPC MEMBERS WHO VOTED IN MAY TO STOP RAISING RATES
SWATI DHINGRA, EXTERNAL MPC MEMBER
June 13: “The lags in monetary policy transmission imply that there is little we can do to affect inflation in the immediate future.”
“There are reasons to suspect that policy transmission will be slower than previous cycles.”
SILVANA TENREYRO, EXTERNAL MPC MEMBER
April 14: “We need to be patient (to see the effects of past rate increases). We don’t want to get burned. We don’t want to get an ice-cold shower.”
(Compiled by Suban Abdulla; editing by David Milliken)
