With activity bouncing back strongly, and inflation rising faster than expected, Deputy Governor Dave Ramsden said on Wednesday that the BoE might start to consider tightening monetary policy sooner than he previously thought.
On Thursday, Monetary Policy Committee member Michael Saunders went further, warning that sticking with the BoE’s full 895 billion pound ($1.24 trillion) bond purchase programme risked entrenching higher inflation expectations if the recovery continued apace.
On Friday, a group of lawmakers told the BoE to explain why it was not winding down its stimulus.
But the way ahead is far from clear.
The BoE does not know how many jobs will be lost when the government ends its wage subsidies programme in September, so MPC members remain cautious about removing stimulus.
And the central bank is acutely aware of how talk by the U.S. Federal Reserve of merely slowing bond purchases in 2013 caused a “taper tantrum” which pushed up borrowing costs in financial markets sharply and forced the Fed to stress it was in no rush.
Below is a summary of the ways the BoE…