Market news
04.09.2020, 09:58

Bank of England policymaker Saunders It is likely that additional easing will be appropriate

  • The economy’s faster-than-expected rebound in the last few months has reflected a benign window in which large fiscal support has coincided with the relaxation of lockdown measures and low infection rates. This window may now be closing.

  • Unemployment is likely to rise significantly in coming quarters as the furlough scheme winds down and workforce participation recovers.

  • The strength in money growth is an indication of the exceptional level of fiscal and monetary policy support in recent months. It is unlikely to translate into excess spending given the economic impact from Covid-19.

  • Looking forward, I suspect that risks lie on the side of a slower recovery over the next year or two and a longer period of excess supply than the forecast in the August MPR. 

  • If these risks develop, then some further monetary loosening may be needed in order to support the economy and prevent a persistent undershoot of the 2% inflation target.

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