Bank of England policymakers set out views on rates outlook

By Suban Abdulla

LONDON, Nov 5 (Reuters) - The Bank of England raised interest rates to 4% on Thursday after a 8-1 vote among the members of its Monetary Policy Committee.

Below are excerpts from comments made by individual MPC members.

VOTED TO RAISE BANK RATE TO 4%

GOVERNOR ANDREW BAILEY

"There is now enough inflationary pressure in the pipeline caused by the rise in energy prices, that an increase in Bank Rate is warranted."

"Without news which softens the risks to inflationary pressures, I can see the argument for a further increase in rates and thereafter taking a more conditional approach, dependent on the evidence on energy prices and inflation dynamics."

DEPUTY GOVERNOR CLARE LOMBARDELLI

"The conflict has lasted longer than expected."

"Current circumstances warrant a 25 basis point increase in Bank Rate at this meeting. In the absence of evidence of weaker inflation pressures, there is likely to be a case for a further increase in rates in the near term."

"Beyond that, the path for rates is conditional on the interaction of the underlying economy, higher energy prices, the nature of their transmission and any further shocks."

CHIEF ECONOMIST HUW PILL

"Raising Bank Rate by 25 basis points at this meeting represents a significant step towards attaining the monetary policy stance needed to address current threats to price stability, including those stemming from uncertainty surrounding events in the Middle East and their influence over energy prices in the medium term."

DEPUTY GOVERNOR SARAH BREEDEN

"The longer energy prices remain high the more likely persistent inflationary effects take hold, which would require further tightening in Bank Rate."

"But this will also depend on how energy prices propagate, especially given the risk that demand weakens."

"I will continue to assess the balance of risks at each meeting. For now I judge the current restrictiveness of financial conditions as sufficient to balance these."

DEPUTY GOVERNOR DAVE RAMSDEN

"The outlook for inflation has deteriorated, with higher energy prices following de-escalation of the conflict since July."

"I have also become somewhat less confident about the domestic disinflation process, the degree of slack, and how restrictive the policy stance has been to date."

"A 25 basis point increase in Bank Rate is necessary now to ensure the appropriate degree of restrictiveness."

EXTERNAL MPC MEMBER MEGAN GREENE

"Since September, we have had a more prolonged shock, a further leg up in energy prices and there is evidence of less benign initial conditions when the shock hit."

"We continue to face Knightian uncertainty, but a rate hike now is appropriate based on the central outlook rather than just risk management considerations. Additional hikes will likely be required going forward, though further out this will depend on pay, pricing behaviour and slack."

EXTERNAL MPC MEMBER SWATI DHINGRA

"Raising Bank Rate by 25 basis points provides additional insurance against upside risks from stronger pass-through and firmer growth in demand."

"To support maintaining Bank Rate at a higher level for an extended period, I would need to see clear evidence of a recovery in firms' pricing power and households' purchasing power alongside signs of mutually reinforcing wage and price pressures."

EXTERNAL MPC MEMBER ALAN TAYLOR

"We lack evidence of second-round effects, but the larger shock raises the risk. That motivates insurance now."

"Further tightening, however depends on continued energy price pressure as well as unfolding evidence of propagation into domestic wages, price-setting and expectations, particularly through the 2027 pay round. The next move could be up, down, or sideways."

VOTED TO RAISE BANK RATE TO 4.25%

EXTERNAL MPC MEMBER CATHERINE MANN

"My recent votes to increase Bank Rate by 25 basis points represented a 'down payment' to lean against second-round effects, reinforce credibility, and uphold 'good policy'."

"With CPI inflation at 3.5% in September, the economy has crossed the estimated statistical threshold into a high inflation-tight labour market regime where the asymmetric behavioural responses of households and firms support more robust second-round effects."

"Moreover, a substantial inflation risk premium is in the UK yield curve, reflecting five years of above target inflation, where it has averaged 4.7%. Therefore, from a risk management and credibility perspective, a 50 basis point hike in Bank Rate is 'good policy'."

(Reporting by Suban Abdulla; editing by Andy Bruce)