On Thursday he reiterated the risks to the central bank's main forecasts. "I am very uncertain particularly about price-setting and wage-setting in this country. We have got the largest upside skew in our forecasts that we have ever had on inflation," Bailey said. Thursday's comments by the MPC members to the parliamentary committee underlined that sense of uncertainty. Haskel aligned himself with Catherine Mann who also sees big upside risks to the BoE's price forecasts. "Economic theory suggests that uncertainty around the persistence of inflation should be met with more forceful action," Haskel said in his annual report to parliament. "(So) I shall remain alert to indications that inflation is more persistent than we expected, and act forcefully if necessary." By contrast, Tenreyro, who last week voted to keep Bank Rate at 3.5%, stressed that the full force of the BoE's rate hikes over the last year had yet to be felt, with the momentum in the economy already fading. "In my view, yes, rates are too high right now," she said, adding that she would consider a cut in future policy meetings. BoE Chief Economist Huw Pill told the lawmakers there were some signs of a weakening in the labour market which could help to contain inflation pressures. "That said, there is no room for complacency. Inflation remains unacceptably high," he said in an annual report to the Treasury Committee.
"Returning inflation to target in a sustainable manner requires that the MPC continues to be watchful for signs of greater persistence in inflationary pressures than is embodied in our baseline forecast." (Reporting by David Milliken in London and Andy Bruce in Manchester, England; additional reporting by Suban Abdulla; editing by William Schomberg and Christina Fincher)
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