BoE's Haskel warns against preemptive tightening of monetary policy

One of the Bank of England's top officials argued against reducing monetary stimulus for the economy.

In prepared remarks for a speech, Jonathan Haskel said: "In the immediate term, the risk of a preemptive monetary tightening curtailing the recovery continues to outweigh the risk of a temporary period of above-target inflation.

"For the foreseeable future, in my view, tight policy isn’t the right policy."

In particular, the policymaker pointed to the risks to economic growth from the spread of the Delta variant of Covid-19.

Furthermore, while higher oil prices could be expected to push consumer price inflation past 3.0%, the lion's share of the economic recovery could be put down to government support measures many of which had only just expired.

And more would do so by the autumn.

Hence, in Haskel's opinion, it was right for the BoE's Monetary Policy Committee to "lean against a preemptive tightening of monetary policy until we can be more sure the economy is recovering."

Just the week before, two of his peers on the MPC, Dave Ramsden and Michael Saunders, had argued for the opposite on the basis that CPI growth was likely to hit 4.0% - twice the BoE's target pace.