BoE’s Tenreyro: More time needed to think about rate hike

Bank of England interest rate-setter Silvana Tenreyro said she needs more time to judge how the end of the government’s job-saving plan impacts the labour market, adding to signs that she sees no urgency to raise rates.

Uncertainty over the effects of the unpaid leave plan should be resolved over the coming months, which should help paint a clearer picture of the position of the labour market, according to Tenreyro who spoke to the Centre for Economic Policy Research.

Around 1 million workers were probably still on the government’s job retention plan when it expired at the end of September, according to estimates, raising the risk of a rise in unemployment and underemployment.

Tenreyro also said a rise in inflation pressures from surging energy prices was likely to fade quickly. She has adopted a different tone about the need to raise borrowing costs to that of Governor Andrew Bailey who signaled last week that the BoE would act to contain inflation risks.