Bank of England (BoE) policymaker Silvana Tenreyro said on Thursday that she can’t say if the policy will need to loosen or tighten in the future due to the inflation uncertainty.
“After lockdown ends, there will be both inflationary and disinflationary pressures,” Tenreyro added. “Balance of forces leans towards deflationary pressures, depends on the length of the lockdown and policy effectiveness.”
Tenreyro further acknowledged that the depreciation of the sterling and the looser fiscal policy would push up on inflation. “Despite the policy responses, we will not be able to avoid a rise in unemployment, which will weigh on real wage growth across the economy.”
Market reaction
The UK FTSE 100 Index, which dipped into the negative territory in the last hours, was last seen adding 0.25% on the day at 5,611.49 points.
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