LONDON, July 14 (Reuters) - Bank of England Governor Mark Carney and other top officials from the central bank are speaking in Britain’s parliament.
Below are some of their comments:
The Eurogroup leaders’ Monday statement: “requires Herculean efforts from all sides, not just the Greeks in terms of structural reform.”
“The process by which this agreement was struck, the nature of the agreement, the scale of the challenge, underscores the series of institutional shortcomings that still exist within European monetary union.”
“There are big execution risks on all sides, including execution risk around the profile of the debt which in the judgement of the IMF and I believe other authorities, and we would share those judgements, is not sustainable in its current form.”
“The point at which interest rates may begin to rise is moving closer with the performance of the economy, consistent growth above trend, a firming in domestic costs, counter balanced somewhat by disinflation imported from abroad.”
“Once rates begin to adjust, we expect for those adjustments to be at a gradual pace and to a limited extent. We will learn about the sensitivity as rates begin to adjust, we will watch it very closely.”
”We do not take a view on the level of the exchange rate.
”What’s important with sterling with respect to monetary policy is that large moves of Sterling have in the past, and it appears to be in the present, had a persistent impact on inflation. In other words the pass through has not been immediate but it has shown up over time.
”If there are large movements... it is harder to just look through those adjustments. That said, that does not equate to reacting to short term moves and in no way would one expect tightening financial conditions because of strength of Sterling to move the need for some adjustment in interest rates.
”I do think there are a variety of factors that mean that the new normal, certainly over the policy horizon over the next three years, is substantially lower than it was previously.
“I see no scenario in which they would move towards historic levels.”
”On the margin, changing wages will shift the balance in terms of firm investment either into capital or into human capital and should on the margin have some effect on productivity.
“I take note of the OBR’s analysis that from an inflation perspective this is a very modest impact.”
On unsecured lending: “it’s not yet ... flashing red on the dashboard.”
On the current account: “Ultimately one is reliant on the kindness of strangers in order to finance a current account deficit. If that kindness goes away there is a sharp adjustment that is required in the economy.”
”The budget has smoothed the pace of fiscal consolidation, it hasn’t changed the overall quantum of it.
“I think the political will to hold the euro together has been pretty tested over the last few weeks.”
BOE‘S MCCAFFERTY ON RATES, INVESTMENT
”The balance of risks that we face is shifting as we look over the course of the forecast. The near term risks to inflation have therefore been on the downside because of that risk of persistent lower inflation because of behaviour change.
“As I look out towards the end of the forecast my perception of the risk starts to change towards the upside.”
“One of the things that we are starting to see is a recovery in business investment over the course of 2014, 2015. We have seen quite a sharp rise in business investment and as the data matures its become clear that that pick up .... has been stronger than was initially expected.”
BOE‘S MILES ON INTEREST RATES, PRODUCTIVITY
“There may be some glimmer of light at the end of what’s been a very long, dark tunnel in terms of productivity in the last few years. I think I‘m right in saying that the latest figures for the growth of productivity per hour are something like close to plus 1 percent for the first quarter of this year, so that’s a little bit more like a normal number having had many years where it’s either negative or zero.”
“The first rise in interest rates, which I think clearly is coming and I think not a bad thing.”
“I feel more reassured this time round that we can deal with that without too much pain.”
”The real wage effects appear to be really very small. When a large number of people come they don’t just add to the supply of new labour, they add to the demand for labour as well because they end up spending most of what they earn in the UK.
”So it doesn’t do a whole lot to real wages.
Reporting by Kate Holton, James Davey and Neil Maidment