BOE's Saunders: would not be surprised to see inflation hit 3% late in 2017 or early 2018

Speaking at the Federation of Small Business, in London, BOE MPC Member Michael Saunders was noted saying that most recent evidence suggests that the economy continued to grow in Q1 of 2017 and would not be surprised if CPI inflation rises above the central bank's forecast to reach 3% later this year or early next.

Key quotes:

   •   MPC has not gone soft on low inflation remit
   •   Prospective inflation pressure does not imply that the UK will face persistently high inflation
   •   It's natural for mon pol to respond to a changing economic outlook consistent with a low inflation goal
   •   Current policy is clearly accommodative and would provide stimulus even after a modest rate rise
   •   UK could maintain 2% annual growth rate across 2017 & 18 even with consumption weakness
   •   Large depreciation of sterling will have powerful effects on the economy over the next year or two
   •   Expects to see higher inflation and a greater shift from consumption to investment and exports than the BOE forecast in Feb
   •   Do not believe the MPC is necessarily obliged to delay any policy moves until we have
   •   MPC underestimated strength of UK economy last year, but we weren’t alone in missing forecasts
   •   Risks that the near-term boost to inflation from sterling’s depreciation will be steeper than the February IR base case
   •   Possible that despite Brexit the UK expansion has developed greater momentum & resilience