Thursday, 28 September 2017

Interest rate rise should not be feared, says Bank of England economist

Britons should not fear higher interest rates, the Bank of England's chief economist has told Sky News, fuelling speculation that an increase is imminent.

In an exclusive interview, Andy Haldane said that any rise in borrowing costs should be seen as a "good news story" - a sign that the economy was recovering.
His comments come amid speculation that the Bank's Monetary Policy Committee will increase rates imminently.

Mr Haldane said: "In the September minutes in particular, a majority of the committee - of which I am one - said that we could be nearing the point where a reduction in some degree of monetary stimulus might be warranted in the coming months.

"And let's be clear here: for me that would be a good news story. This would be interest rates getting back to normal, even if the new normal is different to the old normal.

"This would be a sign of the economy healing, and therefore adjusting to that healing process. So rather than being a source of fear or trepidation, this ought to be a good news story about the economy proving resilient."

Since those September minutes, investors in the market have started to price in an interest rate increase as soon as November.

Mr Haldane said of the last minutes: "At the time of writing - and things have moved on a bit since then - interest rates in the market were a bit lower than we thought was likely to be necessary to get inflation back to our target on a sustainable basis.

"The market has moved a bit since then and next time we meet in November we'll have to reassess how the economy looks and what market rates are then signalling."

SKY     News.