BOE’s Tenreyro Sees No Pressure to Vote for U.K. Rate Hikes Soon

(Bloomberg) -- Bank of England policy maker Silvana Tenreyro says she’s unlikely to support raising interest rates in the next few months as slower growth keeps inflation in check.

“Coupled with signs of a weaker global outlook, recent developments likely lengthen the period until there is a sufficient pickup in inflationary pressures for me to vote to raise bank rate,” Tenreyro said in a speech in London Wednesday. “I do not currently anticipate such a pickup in the next few months.”

The economist also repeated her view that in the event of a no-deal Brexit, the more likely BOE response would be a policy loosening, although “this is by no means certain.” Tenreyro described her comments as “my expectation, not a promise,” which may shift as the data evolve.

Though she acknowledged Brexit risks, increased trade tensions, bleaker global sentiment and weakness in U.K. second-quarter growth, they have yet to weigh on inflation expectations, and core price growth has been stable in recent months, she said. In that light, she reiterated the Monetary Policy Committee’s view that in the event of a smooth Brexit, “a small amount of policy tightening will be required over the forecast period.” She added that the timing of any such move remains unclear.

Her speech mainly explored why inflation expectations exceed actual price growth. She concluded that central bankers must be careful in interpreting median expectations as well as improve communication and education.

--With assistance from Lucy Meakin.

To contact the reporters on this story: Olivia Konotey-Ahulu in London at okonoteyahul@bloomberg.net;Jill Ward in London at jward98@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Fergal O'Brien

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