Bank of England's Michael Saunders says vote for a 50bp hike in February "does not necessarily imply that I believe that the level of rates one or two years ahead will be higher than the yield curve used for the February MPR."
He says it is important to distinguish between the pace of tightening and the level of rates at the end of a tightening cycle.
More key comments
Quicker tightening early on could help limit the overall tightening cycle
Vote for a 50bp hike in February does not necessarily imply that I would vote for a 50bp hike in the event that further tightening is required.
Case for policy to move in a larger step probably is greater when the bank rate is clearly further away from the approximate level that, if maintained, would return inflation to target.
Not in favour of aiming to restore the lost potential output by "running the economy hot".
Running the economy hot would simply produce an even more persistent inflation overshoot.
Maintaining a relatively loose policy stance under current conditions would be likely to produce a further undesirable rise in inflation expectations.
Such an outcome would be costly to reverse and could limit the scope for prompt monetary easing the next time the economy needs support.
GBP/USD update
Cable is offered on the back of a risk-off theme in markets on Tuesday. The comments from Saunders, however, are serving to stall the slide, with the price a touch higher as it starts to correct from the session lows of 1.3298. The GBP/USD pair is now near 1.3310.
