- There is a risk that self-sustaining inflationary dynamics embed in expectations
- Must guard against cutting too far or too fast
- Vote to maintain rates is a skip rather than a halt
- Continue to see rate cuts if the economy evolves as forecast
- Need to recognise CPI stubbornness as more pressing
- Shocks could prompt policy changes either way
Pill has made similar comments recently, so these are not new. There’s been a slow but clear shift of focus in the MPC towards inflation recently. That shouldn’t be too surprising given the elevated inflation and wage growth, and rising consumer inflation expectations.
This article was written by Giuseppe Dellamotta at investinglive.com.