BoE's Saunders: There’s less room for UK to grow before you need rate rises to curb inflation

In an interview in the Evening Standard newspaper, Bank of England policy maker Michael Saunders said that if the economic growth surprises on the upside, the BoE might need to be a bit more activist than it has been in the past few years.

Key quotes (via the Evening Standard):

  • The consequences of exit, I think, are highly damaging for the economy. The options range from bad to awful.
  • Brexit probably means the economy will grow several percentage points less than it otherwise would do.
  • Setting monetary policy, we’re not trying to determine the outlook for growth over the next 15 years, we’re thinking about the next couple of years and I doubt if those long-run effects of Brexit come through immediately
  • If there are fewer workers, due to post-Brexit restrictions potentially, you can see the labour market ends up getting tighter
  • The pound has been quite sensitive to Brexit, that might give some support to growth through exports, as well as pushing inflation up. How policy responds depends on all of that.

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