BOE’s Broadbent: Technically feasible to offset purely fx caused inflation with 0.5% rate rise

Bank of England (BOE) deputy governor Ben Broadbent is on the wires now, via Reuters, noting that there is not much evidence that accommodative monetary policy is having material impact on the distributions of income and wealth.

Key Headlines:

Technically feasible to offset purely fx caused inflation with 0.5% interest rate rise

Ex-fuel, pass-through from sterling drop will be long enough for MPC policy to be effective

Possible to keep inflation close to target after significant depreciation in the exchange rate

Tolerance of inflation overshoots partially depends on “the scale of the shortfall in economic activity below potential”.

MPC less inclined to accommodate above-target inflation if it didn’t also expect demand to fall short of supply potential