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BoE's MPC member Vlieghe: Monetary policy will focus on medium-term outlook rather than transient factors

  • An early rate hike is possible if there is smooth transition from furlough
  • However, tightening policy too early would be a much costlier mistake than tightening too late
  • Once furlough scheme ends, we will have better idea of economic slack
  • It will not take years for interest rates increases to start having an effect
  • It will be a communication challenge to keep reminding people that upcoming inflation is likely temporary in nature
  • Bond markets almost entirely reflect improved economic outlook rather than ominous signs
  • Medium-term outlook consistent with US/UK inflation targets
  • No signs of increases in perceived tail risks of higher inflation

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U.S. consumer confidence unexpectedly improves in July
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