“If the economy evolves broadly in line with our February central projection, then in my view it is likely that no further monetary stimulus is required,” Bank of England (BoE) policymaker Gertjan Vlieghe said on Friday, per Reuters.
Additional takeaways
” Given how low I think the neutral rate of interest is, there is no hurry at all to remove stimulus.”
“My preferred path for policy would be to keep the current monetary stimulus in place until well into 2023 or 2024.”
“There is also the possibility of a weaker scenario, and my own view is that risks remain skewed in this direction.”
“I worry that the resulting labour market slack will be more persistent and more disinflationary than in our central projection.”
“Even a small amount of persistent labour market slack would be enough to keep wage pressure too low.”
“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative bank rate as the tool to implement the stimulus.”
“Negative rates could be needed later this year or into next year.”
“Possible that we have a short period of pent up demand, after which demand eases back again.”
“It would be a policy error to respond to such circumstances with early monetary tightening.”
“Even if the economy recovers more strongly than in our central projection, I think the removal of monetary stimulus is unlikely to become appropriate until well into 2022.”
“Given low neutral interest rates, is likely we would not have to tighten all that much.”
Market reaction
The British pound showed no immediate reaction to these comments and the GBP/USD pair was last seen gaining 0.13% on the day at 1.3990.
Share
