Bank of England policymakers' comments on the UK outlook

Reuters

18 hours ago

LONDON, June 13 (Reuters) - Bank of England Governor Andrew Bailey said earlier this month that he was sticking with a "gradual and careful" approach to cutting interest rates as uncertainty from U.S. tariffs clouds the outlook.
In May, the BoE's Monetary Policy Committee voted 5-4 to cut interest rates by a quarter of a percentage point to 4.25%. External MPC members Swati Dhingra and Alan Taylor backed a cut to 4%, while Catherine Mann and Huw Pill voted to hold rates.
Financial markets see a roughly 90% chance that the BoE will keep rates at 4.25% on June 19, and price in about 50 basis points of rate cuts by the end of 2025 - similar to what is expected from the U.S. Federal Reserve.
Following is a summary of comments by MPC members since their last rate decision was announced on May 8.
June 3: "I think the path (for interest rates) remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty."
"Gradual and careful remain my ... guiding line," Bailey said of his thinking on future rate cuts.
June 3: "We've added the word 'unpredictable' to 'uncertain' because of the sheer nature of what we're dealing with."
May 29: "The less volatile part (of inflation), again it's gradually grinding down but very slowly."
"We don't want to lose the relationship with the U.S. We really want to get to the (trade) issues that are underlying this and help to solve them."
May 20: "I would characterise my May vote as favouring a 'skip' within a continuing withdrawal of monetary policy restriction, rather than a halt to the process of withdrawal."
"It should not be seen as favouring a halt to - still less a reversal - of that withdrawal of restriction."
"(As) long as disinflation back to target is not complete, maintenance of some restriction will still be required. On my reading, that is a view that is held across a broad swathe of MPC members."
May 13: "I remain concerned that we have seen a sort of structural change in price and wage-setting behaviour, maybe driven by the type of things that were involved in models of the inflation process from the '70s and '80s."
May 9: "The analysis in the baseline forecast does not suggest that there's a dramatic shift in the behaviour of the UK economy on the back of these trade announcements and trade uncertainties."
May 12: "Caution remains appropriate. I'll be more comfortable when I see material deceleration in the data over a longer period."
June 3: "I thought that there was a case for a cut in Bank Rate, even absent the international developments, because I judged that domestic disinflationary process that we've all talked about was progressing as I expected, and I thought it would continue."
June 1: "The big picture, the landscape on which I'm thinking about policy, is that the waves of disinflation are continuing."
"I think the labour market is loosening. We've seen unemployment rise a little bit, and in addition we've got relatively weak growth."
May 30: "I'm not going to pre-emptively announce my vote, but I think I indicated in my dissent that I thought we needed to be on a lower (monetary) policy path."
"I'm seeing more risk piling up on the downside scenario because of global developments."
May 12: "The erosion of confidence that we saw has continued. We're getting very low readings on PMI and REC and so forth. So there's that continuation, the sort of wait and see in ... precautionary saving (and) postponement of investment."
"The international dimension for me is quite perilous."
June 7: "Our view is that we can look through it (higher inflation), but of course there's a pretty big risk."
"The last time we had a lot of second-round effects. We're hoping that we won't have second-round effects this time around, but we're not sanguine about it."
"(Private-sector pay growth was) way above what would be consistent with a 2% inflation target".
"It's (going) in the right direction, it's just not going as quickly as I would like it to."
May 12: "What's a little bit more worrisome for me is that medium-term inflation expectations have also started picking up."
"I came into this last round quite torn about whether to hold or cut by 25 basis points."
June 3: "On balance, the risks to inflation and growth appear to me to be tilted to the downside."
"The most significant contributions to the near-term pickup in headline inflation reflect developments in household energy bills and past energy shocks, and to a lesser degree, regulated price increases, rather than an imbalance in underlying supply and demand pressures."
June 2: "An additional cut in this cycle of Bank Rate reduction, so as to try to compensate for tightening at the long end, could run counter to the need to maintain restrictiveness for long enough to purge the structural rigidities in labour and product markets that I have often noted are key to my Bank Rate decisions."
"Now that the MPC is reducing restrictiveness, I believe that we need to consider the differing effects of our policies on different parts of the yield curve ... as a more salient issue."
May 14: "The labour market has been more resilient. Now, yes, we've had some prints that are indicative of a slowing labour market, but it is not a non-linear adjustment."
"I need to see the loss of pricing power. I need to see that firms are starting to be much more moderate in setting their prices across a broad range of products."
May 8: "I am worried that we're not going to see that recovery in productivity and supply, which is a kind of fundamental judgment to our baseline forecast. If that on its own happens, that would tend to push inflation up relative to baseline forecast."