European Economy: Hawk Besley Expects Inflation To Fall
BoE hawk Besley says he expects inflation to come down next year and approach 2% by end of 2009. Besley voted in favour of a 25 bp rate hike at the July MPC meeting and was expected to have voted in favour of another rate hike this month. But today’s comments suggests that he might have voted with the majority for a steady hand instead.
Minutes from the monetary meeting are due tomorrow. However, Besley also warned against “inflationary wage increases” and said U.K. interest rates must be kept at “suitable level” until inflation threat has passed, suggesting that a rate cut would only be appropriate once there are signs of inflating abating.