(Adds details and background, links to Bailey story)
LONDON, Oct 9 (Businesshala) – Bank of England policymaker Michael Saunders has told households to be ready for interest rate hikes “quite early” as inflationary pressures mount in the British economy, the Telegraph newspaper said on Saturday. .
Saunders said investors were right to bet on a rapid rise in borrowing costs with consumer price inflation above 4%, indicating the BoE could become the first major central bank to raise rates since the pandemic .
“I am not in favor of using code words or stating my intentions before the meeting. Decisions are taken at an appropriate time,” Saunders said.
“But the market has raised the bank rate earlier than ever in the past few months and I think that is fair.”
Last month the nine-member Monetary Policy Committee unanimously voted to keep rates at 0.1%.
But Saunders and Deputy Governor Dave Ramsden voted to prematurely halt the BoE’s government bond purchases.
Saunders said the February rate hike by the British central bank had the markets full price and the December increase in borrowing costs was half the price.
“I’m not really trying to give a comment on what, but I think it’s fair that the markets have gone into pricing on a much earlier path of tightening than before,” he said. .
Saunders’ remarks were followed by BoE Governor Andrew Bailey saying that inflation running above the central bank’s 2.0% target was related and had to be managed to prevent it from becoming permanently embedded.
“We will have a very delicate and challenging task on our hands, so we have to stop embedding this thing permanently because it would obviously be very harmful,” Bailey told the Yorkshire Post newspaper. (Reporting by Maria Ponnezhath in Bengaluru; and James Dewey in London; Editing by William Schomberg)