Bank of England (BoE) policymaker Michael Saunders said on Friday that the Monetary Policy Committee (MPC) has various options in its tool kit to support the economy if additional easing is required, as reported by Reuters.
“In my view, a jobless rate of well above 5% would almost certainly indicate that we are some way from closing the output gap sustainably.”
“The MPC has ample scope to tighten monetary policy if required to restrain inflation.”
“Shortfall in activity vs likely post-pandemic path for potential output once temporary effects fade is large now, unlikely to close in next few quarters.”
“As long as this shortfall persists, it would be hard in my view to argue that the output gap has closed sustainably.”
“Hard to reconcile estimates that the output gap is modest and little changed over the last year vs other indicators which suggest spare capacity has risen markedly.”
The GBP/USD pair showed no immediate reaction to these comments and was last seen gaining 0.2% on the day at 1.3758.