A week on from leaving UK interest rates on hold, Bank of England policymakers have been scrambling to explain their votes, and hint what might make them change their mind.
This morning, Jonathan Haskel, one of two monetary policy committee members who voted to raise rates last week, has said he wants to seee more evidence that inflationary pressures are cooling.
In an interview with Reuters, Haskel said: “The signs that we’ve seen thus far are encouraging. I don’t think we’ve seen quite enough signs yet.
"But if we accumulate more evidence on persistence, then by the very logic I’ve just set out, I’d be happy to change my vote.”
Haskel revealed that his vote last week, to raise interest rates to 5.25%, was “finely balanced” – perhaps a sign that he could soften his position, if inflation pressures softened first.
But he insisted it was right to worry about inflation becoming embedded.
“I’m not going to apologise for banging on about persistence because I think we’re right to.”
The Bank left rates on hold at 5.25% in a rare three-way split, with six policymakers voting for no change, and one – Swati Dhingra – pushing for a cut.
Haskel’s fellow hawk, Catherine Mann, revealed yesterday that her vote was “finely balanced” but also cited risks of “continued inflation momentum and embedded persistence”.
Mann also warned that attacks on cargo ships in the Red Sea could create an “upward inflation shock”, driving up goods prices, and meaning services inflation – notoriously sticky – would need to fall further before rates should fall.
The UK housebuilder Bellway has reported that falling mortgate rates has spurred demand.
It told the City this morning that reservations in January were higher than a year ago: "The reduction in mortgage interest rates throughout the first half has led to encouraging levels of customer inquiries in the traditionally quieter winter trading period, and an improvement in the private reservation rate during January to 0.59 per outlet per week (January 2023 - 0.45)."
Bellway also reported a 28% drop in housing completions in the six months to the end of January, to 4,092 homes. This knocked its revenues down to £1.25bn, from £1.8bn a year earlier.
The company says it is on track to build 7,500 homes this financial year (to the end of July), down from almost 11,000 in the 12 months to 31 July 2023. Also coming up • 9am GMT: Italian industrial production report for December • 4pm GMT: Russia’s GDP report for December
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