Bank of England (BoE) Deputy Governor Sarah Breeden is testifying on the May Monetary Policy Report (MPR) before the UK Parliament’s Treasury Select Committee (TSC) on Tuesday.
Breeden presented the Annual Report before the MPR hearings.
Key quotes
Economy moving gradually into excess supply.
Future policy decisions require certainty that inflation is on track.
Tariffs expected to have small impact on the UK economy.
Slack opening up in labor market will guide policy.
I thought there was a case to cut bank rate in May even without tariff hit.
No reason to doubt steer from agents’ pay survey that wage settlements will fall to 3.7-3.8% by end of year.
Spare capacity is opening up, labor market loosening.
Majority on MPC represent a broad church.
Our communication is as important as the vote split for understanding BoE policy stance.
Agree there is uncertainty about how far and how fast to cut rates.
Chance of inflation dynamics getting out of control are much less than in 2022.
Rise in bond yields is not a UK-only story.
more to come ….
Market reaction
When writing, GBP/USD is losing 0.19% on the day, trading near 1.3520.