Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
⏰ React to the Market Faster with Custom, Real-Time News Get Started
BoE rate rise after one-off price shock would be 'self-defeating' - Tenreyro
© Reuters. FILE PHOTO: Flowers in bloom are sen opposite the Bank of England, in London, Britain August 1, 2018. REUTERS/Peter Nicholls/File Photo
LONDON (Reuters) -The Bank of England should not raise interest rates to tackle a surge in inflation caused by higher prices for energy and semi-conductors if it thinks these effects will be short-lived, BoE policymaker Silvana Tenreyro said.
Investors currently expect the BoE to raise interest rates from their current 0.1% before the end of the year, but last month's BoE policy minutes showed officials were split over whether certain pre-conditions for a rate rise had been met.
Tenreyro has previously urged caution in considering tightening monetary policy due to the large amount of slack she still sees in Britain's economy after the pandemic, and recent data appears to have strengthened her views.
"Activity has come in weaker than we anticipated in our last forecast and we remain a normal sized recession below the pre-COVID level of GDP," she told https://www.business-live.co.uk/economic-development/raising-interest-rates-counter-one-21853303 the Western Mail newspaper during a visit to speak with businesses in Wales.
August GDP data released on Wednesday showed Britain's economy is on course to grow by less in the third quarter than the BoE had forecast, although revisions to earlier data show output was closer than previously thought to its pre-COVID level.
Surging natural gas prices and supply-chain bottlenecks mean that the BoE expects inflation to exceed 4% at the end of the year and remain around that level in the first half of 2022, bolstering market bets that the BoE will raise rates soon.
Tenreyro pushed back against this assumption.
"Typically, for short-lived effects on inflation, such as the big rises in the prices of semiconductors or energy prices, it would be self-defeating to try to respond to their direct effects," she said.
"There is uncertainty on the exact persistence and the size of these big pick-ups in prices," she added. "If some effects were to prove more persistent, it would be important to balance the risks from a period of above-target inflation with the cost of weaker demand," she added.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.