“The knock-on effects of the surge in prices – such as pressure on employers to push up wages, which has led to record growth in pay – were unlikely to fade away as rapidly as they emerged,” said Bank of England (BoE) Deputy Governor Ben Broadbent while speaking at the annual Jackson Hole Symposium on Saturday per Reuters.
With this, the policymaker cites the need for monetary policy to remain in restrictive territory for some time yet.
BOE’s Broadbent highlights the evidence on spare capacity, and indicators of domestic inflation, as and when it comes through, as the catalysts for the British central bank’s stance on interest rates.
The policymaker signaled expectations of witnessing softer energy and core goods prices over the next few months but also warned about being cautious amid higher wages.
Additionally, BoE’s Broadbent cites the British economic shock as an illustration of how a sudden contraction in the supply of imported goods could hurt incomes and turn up the pressure on domestic inflation, chiefly via wage increases.
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Source: https://www.fxstreet.com/news/boes-broadbent-cites-knock-on-effects-of-the-surge-in-prices-to-signal-higher-rates-for-some-time-yet-202308272349