Further comments by BOE MPC member Gertjan Vlieghe
- Estimates between 0-0.5% of slack
- Weak Q1 did not tell very much about long-term outlook
- But it was enough such that a May rate hike was not a good idea
- Provided Brexit headwinds do not intensify, policy rates are likely to increase by 25 bps to 50 bps per year over 3-year forecast period
So far his speech is talking a lot about gradual rate rises but goes on to brush aside the negative impact on Brexit.
He also reiterates that his view on the UK's economic growth is similar to the committee's view - which means that they still believe Q1 was mostly a blip and that Brexit headwinds will eventually fade and that will allow them to raise rates more confidently moving forward.
Cable touched a high of 1.3492 on his comments earlier with EUR/GBP falling to a low of 0.8758 as well. But sterling has given back some of the gains with cable now at 1.3475 and EUR/GBP at 0.8765.
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