BoE's Tucker on financial system developments

Tucker said monetary conditions are 'edging towards being restrictive' so long as inflation falls back in the near term.

'That has been appropriate given the degree of pricing power apparently emergent in conditions of high capacity utilisation among firms,' he said.

'It has provide the platform needed going forward to restrain inflation pressures, and to maintain anchored inflation expectations, at a time when, understandably there is public debate about the outlook given that CPI inflation rose above 3 pct for the first time, triggering an open letter from the Governor (Mervyn King) to the Chancellor (Gordon Brown),' he added.

Tucker said his votes on the MPC will 'depend on balancing the medium-term prospect for demand pressures alongside uncertainties about supply conditions and near-term inflation expectations caused by volatility in energy costs'.

Speech by Paul Tucker, executive director, Bank of England at a Merrill Lynch conference for hedge funds, 26 April 2007.

Click here to read the speech