- UK inflation has proved more stubborn than expected
- Domestic inflation falling at quite a slow pace
- Underlying inflation not back in line yet
- Budget tax changes had direct impact on inflation
- Not seeing a revival in labour force participation
- Less competitive labour market than in the past
- Inactivity, Brexit and immigration changes could allow for larger markups on wage which might support inflation
- I am more comfortable now on balance of inflation risks than 6-12 months ago
- We don't want to constrain banks' ability to use liquidity
- We are moving toward a more repo-led system
Headline and core inflation rates have been climbing steadily for a year and the UK services inflation rate has been stuck around 5%. But he's now "more comfortable on balance of inflation risks". Go figure...
UK inflation has been much above the target since 2021 but the BoE continues to maintain a dovish reaction function, which is counterproductive in the face of rising inflation expectations.
