(Adds details and background)
LONDON, April 4 (Reuters) - The Bank of England will
probably need to start cutting interest rates sooner than
previously thought after raising them sharply in recent months
despite signs of weaker inflation pressures, monetary
policymaker Silvana Tenreyro said on Tuesday.
"I expect that the high current level of Bank Rate will
require an earlier and faster reversal, to avoid a significant
inflation undershoot," Tenreyro said in the text of a speech she
was due to make at the Royal Economic Society's annual
conference in Glasgow.
Tenreyro cast one of two votes to leave borrowing costs on
hold in March while a majority of her colleagues on the Monetary
Policy Committee backed a 25 basis-point increase in Bank Rate
to 4.25%, and has opposed rate rises since December.
Investors currently put a 75% chance on a further
quarter-point rate hike by the BoE in May and more than a 50%
probability on another such increase by August.
But Tenreyro said there were signs of a cooling in the
labour market from private-sector pay growth data, which had
fallen back sharply in recent months, and she expected inflation
would fall well below the BoE's 2% target.
"With Bank Rate moving further into restrictive
territory, I think a looser stance is needed to meet the
inflation target in the medium term," she said.
Tenreyro used her speech mostly to explain the BoE's
bond-buying and bond-selling programmes. She said the MPC had
not used its ongoing bond sales, known as quantitative
tightening, as an active tool to tighten monetary policy, and
disputed the characterisation of quantitative easing as
money-printing.
(Reporting by David Milliken
Writing by William Schomberg)
Reuters Messaging: william.schomberg.reuters.com@reuters.net))
