MNI BRIEF: BOE Hike Unlikely In Baseline Scenario - MPC Taylor

Tighter financial conditions will likely be sufficient to constrain UK inflation unless the conflict in the Middle East deteriorates, Monetary Policy Committee member Alan Taylor told an MNI webcast on Thursday.

"The reason for hiking is if you think second round effects have an unacceptable risk of materialising," he said, adding that he judged that "there's enough restrictiveness in the system to keep a bid on inflationary pressures sufficiently, but we have to keep monitoring the Middle East situation."

If commodity prices remain elevated for a prolonged period, as in the particularly adverse scenario C from the Bank's April Monetary Policy Report, where inflation would peak at around 6%, then that "would have to probably imply some change in policy rates in the future," he added. Taylor has consistently voted for a lower Bank rate than the committee at large. (See MNI: Financial Tightening Complicates BOE Hike Calculations )