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Quotes: Bank of England decision day on Thursday: what its rate-setters say

LONDON (Reuters) – The Bank of England looks set to become the first of the world’s major central banks to raise interest rates from their record pandemic low, possibly as soon as Thursday.

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Quotes: Bank of England decision day on Thursday: what its rate-setters say
© Reuters. People walk past the Bank of England, in London, Britain October 31, 2021. REUTERS/Tom Nicholson

LONDON (Reuters) – The Bank of England looks set to become the first of the world’s major central banks to raise interest rates from their record pandemic low, possibly as soon as Thursday.

But there are differences among the nine members of the Monetary Policy Committee about how urgently the BoE needs to respond to growing inflation pressures.

The MPC is due to announce its latest policy decisions and forecasts for the economy at 1200 GMT on Thursday. It also has scheduled policy announcements on Dec. 16 and Feb. 3.

APPARENTLY READY TO ACT

ANDREW BAILEY, GOVERNOR

Oct. 17: “Monetary policy cannot solve supply-side problems but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations. And that’s why we at the Bank of England have signalled, and this is another such signal, that we will have to act.”

MICHAEL SAUNDERS, EXTERNAL MEMBER

Oct. 9: “I’m not in favour of using code words or stating our intentions in advance of the meeting too precisely. The decisions get taken at the proper time. But markets have priced in over the last few months an earlier rise in Bank Rate than previously and I think that’s appropriate.”

HUW PILL, CHIEF ECONOMIST

Oct. 21: The MPC’s decision was “finely balanced” and “I think November is live.”

“The big picture is, I think, there are reasons that we don’t need the emergency settings of policy that we saw after the intensification of the pandemic.”

SOUNDING WORRIED ABOUT INFLATION PRESSURES

DAVE RAMSDEN, DEPUTY GOVERNOR (MARKETS & BANKING)

Sept. 8: “Although I see risks on two sides … at the margin I am slightly more worried about inflationary risks.”

BEN BROADBENT, DEPUTY GOVERNOR (MONETARY POLICY)

Sept. 8: “I was on the side of thinking that these conditions had been met,” referring to the minimum conditions the MPC had set for considering tighter monetary policy. Broadbent said the focus should be on the medium-term outlook.

LESS WORRIED ABOUT IMMEDIATE INFLATION THREAT CATHERINE MANN, EXTERNAL MEMBER

Oct. 14: “(Investors) see that monetary policy normalisation is the direction of travel … and so they are doing their homework and they are starting to price in that direction of travel. This means that there’s a lot of endogenous tightening of financial conditions already in train in the UK. That means that I can wait on active tightening through a Bank Rate rise.”

SILVANA TENREYRO, EXTERNAL MEMBER

Oct. 25: “Uncertainty over the effects of the furlough scheme should be resolved over the coming months, which should help paint a clearer picture of the position of the labour market.”

NOT SPOKEN ON MONETARY POLICY RECENTLY

JONATHAN HASKEL, EXTERNAL MEMBER

July 19: “In the immediate term, the risk of a pre-emptive monetary tightening curtailing the recovery continues to outweigh the risk of a temporary period of above-target inflation. For the foreseeable future, in my view, tight policy isn’t the right policy.”

JON CUNLIFFE, DEPUTY GOVERNOR (FINANCIAL STABILITY)

July 14: “One shouldn’t expect the reopening of the economy to be smooth. This is not something that you can just close down and reopen without bumps in the way … We’re seeing a surge in demand. We’re seeing some constrictions in supply that’s driving inflation. How persistent is that (is the) clear question… We would expect some of these pressures, and we would expect transitory pressures at this stage.”

Economy

Costs of electricity in Italy rose by more than 76% in August

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cost of electricity in Italy

Costs of electricity in Italy rose by 76.4% in August, compared with an average of 51.9% in the euro area. La Repubblica writes about it, citing the estimates of Italy’s Confartigianato, an association of small and medium-sized businesses.

“Italy has structural problems. Here the cost of gas and electricity has always been very high because of the nature of production and the fact that there has never been an appropriate energy plan. Therefore, the average electricity bill in Italy will continue to rise,” said the head of Confartigianato, Bruno Pannier.

According to him, now Italy can concentrate on the production of energy from renewable sources. In this matter, the country is in a better position than other countries of the European Union, in particular due to the climate.

The newspaper said that in July electricity and gas prices in France jumped by 23.8%; in Germany – by 46% and in Spain – 54.3%, while in Italy the increase was 59.1%.

Earlier we reported that Nord Streams was almost completely out of service due to malfunctions.

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Economy

The situation in Europe is worsening. Rising food and energy prices are becoming a growing problem

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rising food and energy prices

The situation with rising food and energy prices in the EU soon will only get worse. This follows from the statement of the head of the European Central Bank Christine Lagarde.

British residents have already spent more than half of their savings. According to The Times, monthly expenditures on British energy prices are growing by a record £145. The pound itself reached a historic low against the dollar and almost equaled it. The sharp decline occurred after the decision of the British government to reduce taxes in the country.

Against this backdrop, Parliament began to prepare a vote of no confidence in the new Prime Minister, Liz Truss, who proposed new economic measures. The situation in Germany is also difficult. As German Finance Minister Christian Lindner admitted, he does not yet know how to fight gas prices.

“We are working in parallel with the commission on gas prices, which was created by the federal government. And so we will be looking for ways in which we can put price control into practice. I have an idea of what direction to think, but I don’t really want to go into all the details,” Ridus said.

Earlier, we reported that cryptocurrencies and the dollar began a showdown for the title of most profitable asset.

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Economy

Nord stream sabotage? “Nord Streams” is almost completely out of order due to malfunctions

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nord stream sabotage

The Nord Stream and Nord Stream 2 gas pipelines are almost completely out of service due to various faults. Many are voicing opinions about sabotage on Nord Stream.

Both gas supply routes to Europe via the Baltic Sea bed are out of service. First there was the Nord Stream 2 accident, where the pressure on one of the lines dropped drastically. The cause of the leakage is currently being investigated. Then pressure dropped in both strings of Nord Stream, but the reason for the drop in pressure is still unknown. There are serious reasons to assume a Nord Stream attack.

The publication noted that the German authorities have already started working with the Danish authorities and local law enforcement agencies to find out the reason for the pressure drop in Nord Stream-2. However, it is not clear how the pipeline will be repaired, as it is under U.S. sanctions and bankruptcy proceedings, although it has been postponed until January 2023.

At the moment it is impossible to name the exact cause of the malfunctions that have occurred. However, the sudden drop in pressure may indicate not just a leak, but a much more serious problem. Also, this accident could have certain consequences for the entire gas market, and repairs could take quite a long time.

Earlier we reported that British banks had begun stopping some mortgage deals because of the pound falling against the dollar.

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