Chief Economist of the Bank of England: ‘No Rush’ to Raise Rates

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The Bank of England is potentially in need to impose a hike in interest rates in order to tackle inflation. However, in a newspaper article that was published on Sunday, the chief economist of the central bank said that the Bank would not do so aggressively.

On his visit to northeast England, Andy Haldane referred to the statement of the BoE after its policy meeting last Thursday that interest rates were likely to need to be increased slightly faster and to a slightly greater extent than it had thought before.

The newspaper, Newcastle Chronicle, reported Haldane as stating: “We have a very strong eye on inflationary developments, and they’re currently ahead of our target.

“That’s why we’ve raised rates once already and why … we said that, on the balance of probabilities, it seems likely that some further tightening of policy might be needed over the period ahead.”

Last November, interest rates were raised by the central bank for the first time after more than a decade, and financial markets currently see an approximately 70 percent chance of an additional basis point increase of 25 in May, which would take the main rate of the BoE to 0.75 percent.

Read more: The Next Interest Rate Hike Could Happen as Soon as May

The paper also reported Haldane as saying that any interest rate increases over the coming year would be considered minor.

Haldane was quoted as stating: “We’re in no rush, rates won’t remotely go back to levels we’ve seen in the past, but nonetheless keeping the cost of living under control is, we think, the single best and most important thing we can do to help the economy,”

Consumer price inflation in Britain reached its highest in over five years at 3.1 percent last November and the central bank estimates that it will take more than three years to recover to its target of 2 percent if it does not increase rates.

Read more: BoE Deputy Director Ben Broadbent: Two Rate Rises This Year Would Not Be A “Great Shock”