• Doesn’t regard bank rate of 2% or higher next year as being unlikely, implausible
• Cost of not tightening promptly enough is relatively high
• Rather than focus on precise forecast for bank rate next year, key point is that tightening cycle may still have some way to go

Just be aware that Saunders will be stepping down as BOE policymaker on 8 August. That said, his remarks does echo what the central bank has been preaching for a while now. However, it isn’t so much what the market perceives as punters are fearing that the BOE may have to stop in their tracks as the UK economy grinds towards a recession.

This article was written by Justin Low at www.forexlive.com.