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Bank of England rate-setter sees “news” in service inflation fall


Bank of England rate-setter sees “news” in service inflation fall By Reuters

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Published Dec 22, 2023 11:39

© Reuters. Professor Jonathan Haskel is seen in this undated portrait released by HM Treasury in London, Britain, May 31, 2018. Jason Alden/UK Treasury/Handout via REUTERS/File Photo

LONDON (Reuters) – A Bank of England policymaker who has disagreed with the central bank’s decision to stop raising interest rates said a key source of inflation pressure is now showing signs of weakening, suggesting he might change his stance soon.

Jonathan Haskel, one of nine members of the BoE’s Monetary Policy Committee, said in a post on X published late on Thursday that there had been “news” in this week’s inflation data.

As well as a bigger-than-expected fall in headline inflation to 3.9% in November from October’s 4.6%, the data showed a fall in inflation in Britain’s services sector which the BoE watches closely to measure the risk of excessive wage growth.

Haskel said a measure of service sector inflation, excluding erratic items, had hardly fallen before this week’s figures which meant the judgement to support tight monetary policy had been correct, adding that the latest fall in inflation was more broadly based, which represented “news”.

He also said: “I wouldn’t want to make policy based on one month data.”

Haskel and two other MPC members have voted to raise Bank Rate to 5.5% at recent meetings but the other six have opted to hold the benchmark rate at 5.25%.

The MPC’s next scheduled interest rate announcement is due on Feb. 1.

The BoE has said it is too soon to talk about cutting rates but investors are pricing as many as six quarter-point reductions in Bank Rate during 2024. Some economists say the BoE risks reacting too slowly to the fall in inflation.

Bank of England rate-setter sees “news” in service inflation fall

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