The Pound is trading up against the majority of its peers this morning as optimistic comments from Bank of England policymaker Michael Saunders buoy GBP sentiment.
Speaking to the Telegraph, Saunders warned that households should brace for the BoE to start raising interest rates ‘significantly earlier’ than previously thought, confirming that financial markets were right to bet on faster increases as the Consumer Prices Index heads above 4pc.
Saunders remarks: ‘I’m worried that there’s a part of the inflation pickup – not the gas price part, but the part driven by capacity pressures and higher pay growth – which could become more persistent unless monetary policy responds… I think it is appropriate that the markets have moved to pricing a significantly earlier path of tightening than they did previously.’
His comments come after the Bank of England’s chief economist Huw Pill also voiced fears over a ‘more long-lasting’ inflation threat to the UK.
The BoE rate hike speculation has helped to offset concerns over the UK’s economic resilience, as the country’s supply chain crisis weighs on business and consumer confidence.