BOE Monetary Policy Committee member Mann is speaking and says:
- Recent geopolitical events have reinforced how exposed the UK economy is to international shocks that require a policy response.
- Implications of new sources of finance for the UK current account deficit are not simple.
- A tighter policy stance could trigger volatility as new actors unwind positions, potentially leading to tighter domestic financial conditions than intended.
- Monetary policy cannot offset cost-push shocks from energy prices.
- The trade-off between inflation and activity is becoming increasingly stark.
- If a shock were to occur and weigh on investor confidence, international investors could respond by reducing their gilt holdings.
- Resulting volatility in yields could be reflected in a persistent risk premium.
Summary:
The tone from Mann leans hawkish overall. The comments focused heavily on persistent inflation risks, geopolitical and energy-related shocks, and the complications tied to tighter policy and financial conditions. Although there was acknowledgment of risks to growth and activity, inflation concerns appeared to remain the dominant priority.
The GBPUSD has bounced off the 100 day MA at 1.3481 and is trading back above a swing area between 1.3497 and 1.3512.
