Dave Ramsden, deputy governor of the Bank of England (BoE), stated on Tuesday that in his opinion further modest policy tightening is likely to be appropriate in the coming months.
He noted that a key question for the outlook is whether the UK's economy can build on the resilience shown to date and continue to grow in the face of the ongoing effects of energy prices and other shocks. The official also added that unlike earlier inflationary episodes, where we saw more persistence in inflation caused by ineffective policy and policy frameworks, this time we have a framework that empowers the policymakers to take action.
According to Ramsden, uncertainty makes it particularly difficult to make predictions about where monetary policy might be headed in the medium-term perspective. Meanwhile, in the near term, some further tightening seems likely to be needed, to prevent current high inflation from becoming embedded in wage and price settings, he added.
Also, Ramsden acknowledged that there are also downside risks to inflation ahead that risks from tightening monetary policy too much.