BoE's Saunders: Neutral rate is higher than 1%; bank rate could go to 2% next year

Haresh Menghani FXStreet

Bank of England policymaker Michael Saunders crossed the wires in the last hour, saying that they are not done on rate hikes.

Additional quotes:

Not correct to say that the neutral rate is 1%, it is higher.
The neutral rate is lower than the pre-global financial crisis.
Don't want to lean against the idea that the bank rate could go to 2%.

Market reaction

The comments provided a modest lift to the British pound. This, along with broad-based US dollar weakness, lifted the GBP/USD pair to a one-week high. Bulls might now be aiming to reclaim the 1.2000 psychological mark. That said, fears that the BoE could pause the rate hike cycle, amid growing recession fears, might cap the upside.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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