BoE’s Breeden: Risks to inflation around the August forecast are to the upside
Bank of England (BoE) Deputy Governor appointee, Sarah Breeden, said on Tuesday, “I agree with the MPC that the risks to inflation around the August forecast are to the upside.”
Additional comments
I see balanced risks to growth and unemployment in both directions.
I expect inflation to be around the 2% target in two years.
When asked about interest rate hikes, given the shocks we have had, it is not a surprise we have been tested severely.
I do think there are lessons about how we use our models, incorporate broader analysis of the economy.
Had we not increased the interest rates the way we did, that would have increased the price of imports, leading then to a very serious increase in inflation.
There is a an "awful lot of tightening" that is to come through.
We're not forecasting a recession.
There are a lot of mixed signals on wages and prices.
I think it is right to calibrate the MPC modelling based on the last 30 years, I wouldn't recalibrate but would look to learn from it.
Market reaction
The above comments fail to move the needle around the Pound Sterling. GBP/USD is trading at 1.2470, down 0.30% on the day.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
