Bank policymaker 'relaxed' about waiting to raise interest rates
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Version 2 of 3. A Bank of England policymaker has said UK economic growth must stabilise or pick up before he will be persuaded of the need to raise interest rates. Gertjan Vlieghe said in a newspaper interview he was relaxed about waiting to raise them from record low levels. The former hedge fund economist, who was appointed to the Bank’s monetary policy committee in July, described the tightening effect of the strong pound on UK monetary policy as “huge”. Related: The UK economy may be growing, but in a highly unbalanced way Britain outpaced all other major advanced economies in 2014 but official data last week showed the pace of recovery slowed in the third quarter of this year, dented by trade as global growth weakened. “I am relaxed about waiting a little longer before we start,” said Vlieghe, adding there had been “a little bit of disappointment” on wage growth. Sterling hit a three-month high against the euro earlier this month, as expectation of more stimulus from the European Central Bank weakened the eurozone currency. “We’ve had a huge tightening from the exchange rate,” said Vlieghe, who added that he would prefer an interest rate cut to another round of quantitative easing – where central banks pumps money into the financial system by acquiring bonds – if the Bank had to act against another downturn. The Sunday Times quoted him as dismissing the notion that central banks should raise interest rates to have ammunition against the next downturn. Economists polled by Reuters expect the Bank to raise rates from 0.5% in the second quarter of 2016. Though the timing may rest on whether the US Federal Reserve tightens policy in December. |