BoE MPC member Michael Saunders reiterated in a speech, “The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.”
He added that these guidance conditions “have now been met”. There is “clear evidence” that GDP has “regained most of the lost ground in recent months”. Spare capacity in the labor market is “declining”. And the economy “continues to grow rapidly”. GDP is likely to regain pre-pandemic peak in the “next few months”.
Also, there is “clear evidence” that core inflation is “no longer below a target-consistent pace”, and it’s “likely to rise further in coming months”. This back drop meets the test of “significant progress in eliminating spare capacity and achieving the 2% inflation target sustainably.”
Even though the phrase “at least until” indicates these conditions are necessary but not sufficient for tightening. He said, “the guidance no longer rules out tightening.” Also, “the question of whether to curtail our current asset purchase program early will be under consideration at our forthcoming meetings”.
US initial jobless claims dropped to 360k, matched expectations
US initial jobless claims dropped -26k to 360k in the week ending July 10, matched expectations. That’s the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -14.5k to 382.5k, lowest since March 14, 2020.
Continuing claims dropped -126k to 2341k in the week ending July 3, lowest since March 21, 2020. Four-week moving average of continuing claims dropped -72k to 3376k, lowest since March 21, 2020 too.
Full release here.