While it was a quiet day for exchange rate movements, tensions are rising in the UK economy as the struggle to prevent a wage-price spiral leads to serious industrial action.
Several of the Bank of England’s Monetary Policy Committee (MPC) members are speaking over the week, and yesterday one of them, Catherine Mann, adopted a notably hawkish tone in saying that interest rates would need to rise perhaps as rapidly as the US Federal Reserve to beat inflation down. She added that sterling would also fall if the BoE lagged behind the Fed.
Later today we will also hear from Huw Pill of the MPC, and chief economist at the BoE, but he has already also outlined a more hawkish note in reaction to “wage setting behaviour”. Tomorrow it’s the turn of Sir Jon Cunliffe.
There is little data of interest today, but tomorrow sees the inflation figure, currently at a 40-year high of 9%. This morning grocery prices were revealed by Kantar to be rising at their fastest for 13 years as the “golden era” of cheap food is over, their spokesperson said.
