Fears of a slowdown triggered by heavy snowfall have been overblown, according to a Bank of England policymaker, who has said the United Kingdom economy could withstand interest rates reaching as high as 2% within the next few years.
Saunders was one of two members of the MPC to vote for a hike in rates in March, from 0.5% to 0.75%, in order to curb growing inflation triggered by the collapse in the Brexit hit pound.
Earlier this week markets had placed an 85pc probability on a rate hike. "It wouldn't be a surprise for him to come out dovish like he did yesterday and then vote for a hike in May and frustrate us all". I don't want to get too focused on the precise timing'.
Saunders said he believed inflation pressure from the labor market was likely to be stronger than the BoE had forecast in February and that the economy would grow by 1.5-2.0 percent a year over the next couple of years, just above its potential.
Mr Saunders examined the word "gradual" as noted in the MPC's guidance. Speaking in Glasgow on Friday, he said: "Previous experience suggests that such snow effects typically reverse in the next month or two".
Connor Campbell, financial analyst at SpreadEx, said: 'There was a slight improvement from sterling as Friday went on, thanks to a hawkish rebuke to Carney's Thursday dovishness from MPC member Michael Saunders.
Last month fellow MPC member Gertjan Vlieghe said the BoE might need to raise rates once or twice a year over the next few years. The National Institute for Economic and Social Research estimates the growth rate to have fallen by half in the first quarter of 2018.
He added: 'Economic activity in March, and especially retail sales, was hit by unusually heavy snow. BOE Governor Mark Carney said in an interview with the BBC late on Thursday that officials would be "conscious that there are other meetings" at which they could act this year. This article is strictly for informational purposes only. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.