Bank of England Deputy Governor Ramsden said that prolonged high inflation is influencing his thinking on interest rates, and that the likelihood of such a situation persisting increased between the July and September monetary policy meetings. The deputy governor responded to the question of whether, at upcoming meetings, energy price spikes and high inflation alone would be sufficient reason to support a rate hike, or whether clear evidence is needed that these are feeding into wage negotiations and corporate pricing. Speaking in a Q&A session after delivering a lecture at the Money, Macro and Finance Society, he said, "It looks like we are in a phase where headline inflation is higher and more persistent. So it is starting to influence my thinking." He also indicated that by the next meeting in November, some initial evidence pointing to the direction of 2027 wage negotiations should be available. Wages agreed in negotiations mainly take effect in March and April.
BoE Deputy Governor flags persistent inflation influencing rate decisions, a hawkish signal that supports sterling.
Ramsden's hawkish stance on persistent inflation supports higher-for-longer policy rates, lifting the policy-rate yield.
