In his scheduled address on Thursday, Bank of England policymaker Michael Saunders said, “The topic of whether to stop our present asset purchase program early will be under discussion at our next meetings.”
“Cutting QE (stopping it in the next month or two) and/or further policy action next year are two options for removing stimulus.”
“Any increase in the bank rate in the next year or so is likely to be rather limited.”
“There are limits to risk management considerations.”
“On the other hand, there are growing risk concerns, particularly about sustaining asset purchases when CPI inflation is at 3% and the output gap has narrowed.”
“Activity appears to have returned a little faster than expected in May.”
“The risk is that the output gap will close sooner than previously anticipated.”
The hawkish comments from Saunders have sparked a new bid wave in the GBP/USD, which has pushed it closer to 1.3900.
The cable is currently up 0.14 percent on the day, trading at 1.3876, after retracing from daily highs of 1.3885 reached just minutes ago./n
