Bank of England (BoE) Monetary Policy Committee (MPC) member Alan Taylor said in a fireside chat at Deutsche Bank in London during European trading hours on Monday that the United Kingdom (UK) services inflation has cooled down at a moderate pace than what he hoped.
Remarks
Weaker forecast in terms of output gap and jobless.
Services CPI has not fallen as quickly or as far as hoped.
Services CPI has been slightly concerning in recent months.
I am looking for service price inflation to normalise along with wage growth this year.
I have become more reassured that we are proceeding towards inflation normalisation at a reasonable pace.
Weaker than expected productivity growth could be a risk to the outlook.
The jobs forecasts are converging on a pessimistic outlook.
Risks are shifting to lower inflation, higher unemployment.
We might have 2-3 rate cuts to go before theoretical neutral level.
Market reaction
There seems to be a slight negative impact of BoE Taylor’s comments on the Pound Sterling (GBP). As of writing, GBP/USD trades 0.17% higher to near 1.3500 even after giving back significant early gains.
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