BoE Deputy Governor Dave Ramsden said yesterday, “CPI inflation has begun to fall significantly but remains much too high. The Monetary Policy Committee has consistently stressed that monetary policy decisions will address the risk of more persistent strength in domestic wage and price settling.”
He went on to warn, “If there is evidence of more persistent pressures, then further tightening in monetary policy would be required.”
Ramsden also mentioned BoE’s efforts in reducing its holdings of gilts and corporate bonds, which he expects to decrease by a total of GBP 100B by October. However, he pointed out that the central bank has almost completely run off its portfolio of corporate debt, possibly paving way for it to sell more government bonds.
In light of these factors, Ramsden stated, “These factors support a carefully considered increase in the pace of reduction in the stock of gilts in the 12 months ahead.” However, he also stressed caution, noting, “I emphasize careful — like the MPC, I want Quantitative Tightening (QT) to set a gradual and predictable pace for unwind and to let it operate in the background, after all.”
