The BoE Deputy Governor Ben Broadbent recently crossed the wires, saying that the BoE would respond by cutting interest rates if the inflation pressures weaken after it starts reversing the QE.
Key quotes (via Reuters)
- The framework is designed to ensure that, should inflationary pressures weaken after that date, the first response would be to cut interest rates.
- QE sales might themselves push down on inflation.
- To that extent, Bank Rate would be lower than it otherwise would have been.
- That’s why we took care to add another sentence to last month’s monetary policy statement: ‘Decisions on Bank Rate will take into account any impact of changes in the stock of purchased assets on overall monetary conditions, in order to achieve the inflation target’.
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