In comments made this Thursday on inflation and the economy, the Deputy Governor of the Bank of England (BOE), Ben Broadbent, said Thursday that “the appropriate response to inflation may be to do nothing.”
“The high inflation rate is likely to decrease, we see good assumptions. “
“The increase in inflation is temporary.”
“The extent of the increase in inflation has been surprising.”
“You have to pay close attention, analyzing the official data as best you can. That includes numbers in the labor market.”
“Much of the current rise in inflation is coming directly from higher oil prices, something that is likely to fall in the early part of 2022. “
“We are not convinced that current inflation in retail prices means higher inflation 18-24 months ahead. That is the most relevant horizon for monetary policy.”
“It is a good assumption that the problems on the UK supply side will be temporary.”
“The behavior of labor costs will be important to me when judging the appropriate stance for monetary policy, this will not be easy.”
GBP / USD reaction
With Broadbent’s comments, GBP / USD found new offers near 1.3720 as it had rebounded towards 1.3750.
The pair is now trading at 1.3742, gaining 0.22% on the day.