The Bank of England (BoE) official, Gertjan Vlieghe, stated on Thursday that bond markets almost entirely reflect better economics and not ominous signs, as reported by Reuters.
Vlieghe stated that medium-term outlook is consistent with US and UK inflation targets. “There are no signs of increases in the perceived tail risks of higher inflation,” he said.
Monetary policy will focus on medium-term prospects rather than transitory factors, the BoE official explained. According to him, inflationary pressures in the medium term will emerge once idle capacity disappears, which will be seen more clearly once current employment assistance programs are terminated.
If the economy ever needs more stimulus, negative rates become an important tool, Vlieghe said. In his view, the limit of negative rates is between -0.5% and -0.75%, he is not clear if it can be lower. Regarding the purchase program, he said that if an increase is necessary, that will depend on whether the markets are in order.
The pound appreciated in the market on these comments, pushing GBP / USD above 1.4150 and EUR / GBP towards 0.8600.
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
