Michael Saunders, a member of the Bank of England'(BoE) Monetary Policy Committee (MPC), stated on Friday that the economic impact of the Omicron coronavirus variant would be a key consideration for him at the UK central bank's meeting later this month. He also noted that he wanted more data on the impact of the new strain before deciding on any changes in policy this month. "At present, given the new Omicron Covid variant has only been detected quite recently", the policymaker said, there could be "particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy."
Also, Saunders warned about risks from delaying a rate hike too long, as the current highly accommodative policy stance could allow the labour market to tighten further and heighten long-term inflation expectations. In this case, he added, more abrupt and painful policy tightening could be required later.
The Boe's official also suggested that if the Uk's economy develops in line with the MPR central forecast or my expectations, the direction of travel for the Bank Rate during the next few quarters is clearly likely to be upwards, but noted that any rise is likely to be limited.