The Bank of England is likely to continue to raise interest rates gradually if the economy keeps growing, but will be “flexible” if there is a downturn, the central bank’s chief economist said in an interview published late on Wednesday.
“If the economy continues to tick along, as we expect, then we might expect some further limited and gradual rises,” central bank rate-setter Andy Haldane told the Daily Mail newspaper, repeating familiar BoE language.
The BoE raised interest rates for only the second time since the 2008-09 financial crisis in August 2018, and almost all economists expect further increases to depend on Britain avoiding a disruptive exit from the European Union in March.
“On the assumption that some deal is done, that would reduce uncertainty and, we think, cause people to take their finger of the pause button and do a bit more investment spending,” Haldane was quoted as saying.
“If the economy begins to change direction, we will be flexible in the face of that,” he added.
BoE Governor Mark Carney has previously said that a disorderly Brexit could cause sterling to slide while damaging the productive capacity of the economy — potentially boosting inflation at the same time as slowing growth.
Foreign ownership of British companies had been important in improving management practices and economic productivity more generally, Haldane said.
The BoE will publish its next interest rate decision on Feb. 7.
Source: UK Reuters