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In a speech delivered at Imperial College in London, Bank of England rate-setter Michael Saunders echoed Governor Carney’s comments on the policy outlook and said that the policy response to Brexit was not automatic and could be in either direction.

Key quotes (via Reuters)

  • Possible that monetary tightening might be needed in future, but does not mean we need to tighten now.
  • Makes sense to wait and see how Brexit unfolds.
  • UK inflation “reasonably well behaved”, growth not strong enough now to create excess demand.
  • Assuming smooth Brexit, limited and gradual tightening probably needed over time.
  • Effect of latest BoE rate hikes on households seems much smaller than usual.
  • Weaker impact of recent rate rises suggests BoE may need to be more forceful when tightening or loosening policy in future.
  • Link between bank rate and changes in household finances less effective when bank rate low.