Michael Saunders, a monetary policy committee member at the Bank of England, who last month voted to tighten policy and raise interest rates, has suggested there could be advantages on waiting for more data on the omnicron variant before the raising the UK base rate. The new strain of the virus will be a key consideration for the committee at the next meeting on December 16th with speculation abound that any rate hike will be delayed yet again.
However, Saunders also warned that there are costs associated with delaying a hike in rates, with a tight labour market expected to strengthen further, which will in turn add fuel to the inflation fire. This may mean that the expected policy of gradual and small rate hikes will be replaced by a more aggressive policy next year which could have painful implications for a hugely indebted economy.
Meanwhile, in Europe, European Central Bank President Christine Lagarde is still firm with her stance that the prospect of an interest-rate increase next year is unlikely but did suggest she would take action to combat elevated inflation should it become necessary in 2022.
Economic Calendar:
- Fri 10th Dec 02:00 GBP GDP (MoM)
- Fri 10th Dec 02:00 GBP GDP (YoY) (Q3)
- Fri 10th Dec 08:30 USD Core CPI (MoM) (Nov)
