When considering whether and when to adjust rates, you always have to wait and see more data – Michael Saunders

The Policy Officer of the Bank of England (BOE), Michael Saunderssaid on Friday that a A key consideration for him at the December policy meeting will be the potential economic effects of the new Omicron variant., as reported by Reuters.

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“It is any increase in the bank rate is likely to be limited given that the neutral level of interest rates remains low. “

“As long as we don’t linger too long, it should be about releasing the accelerator instead of applying the brakes.”

“We will have to consider the potential costs and benefits of waiting to see more data about this before, if required, to adjust the policy.”

“The assumptions are uncertain, especially in light of the new Omicron variant.”

“It is within the range of possibilities that the new variant significantly affects the economic outlook.”

“If the economy develops in line with the central forecast of the MPR or with my expectations, it is it is very likely that the direction of travel of the bank rate over the next few quarters will be upward“.

“Aggregate supply and demand could also be affected by more precautionary behavior.”

“If relaxation is required, the MPC has options to support the economy if necessary, but this is not my core expectation.”

“When considering whether and when to adjust rates, always wait and see more data“.

“Given that Ómicron has been detected recently, there could be particular advantages to waiting to see more evidence.”

“Continued delay could also be costly.”

“I’m not convinced by the view that it would be possible to increase the labor supply (or significantly raise overall potential output) in order to get the economy going.”

“The delay in raising rates could require a more abrupt and painful tightening of policy later on. For me, the balance between these considerations is likely to be a key factor at the December meeting.”