BOE's Vlieghe Urges 'Caution' on Rates Strategy

The transcript discusses the implications of real income growth on monetary policy, highlighting the limited room for easing compared to tightening. It emphasizes caution in rate hikes due to potential consumer slowdowns driven by subdued wage growth and rising inflation. The analysis also covers the role of consumer credit growth in sustaining household spending and the implications for monetary policy. Finally, it addresses the economic slack and the justification for tolerating above-target inflation.

What is the main concern when considering a premature rate hike according to the speaker?

• It might result in a decrease in asset purchases.

• It could lead to a rapid increase in inflation.

• It might be a more serious mistake than a delayed hike.

• It could cause a significant drop in consumer spending.

What factors are contributing to the consumer slowdown?

• High consumer confidence and stable wages

• Increased government spending and low inflation

• Subdued wage growth and rising inflation

• High interest rates and low inflation

How has consumer credit growth affected household spending?

• It has led to a decrease in consumer confidence.

• It has decreased household spending significantly.

• It has had no impact on household spending.

• It has helped sustain household spending.

What might strong credit growth indicate about monetary policy?

• Monetary policy is ineffective.

• Monetary policy is perfectly balanced.

• Monetary policy is too loose.

• Monetary policy is too tight.

What is the implication of a consumption slowdown on economic slack?

• It decreases economic slack.

• It stabilizes economic slack.

• It increases economic slack.

• It has no effect on economic slack.