Bank of England’s Rates Messages Are Not a Failure – Shafik

The Bank of England is not wrong-footing investors and households with its various signals on when interest rates might start to rise, a deputy governor at the central bank said on Friday.

Sterling and British government bond yields fell sharply on Thursday after the Bank surprised investors by giving no clear sign about when interest rates might go up for the first time before the financial crisis.

Governor Mark Carney said the Bank would move when the time was right, in contrast with the U.S. Federal Reserve which has shown it might raise U.S. rates next month. Carney had previously said a decision on whether to raise rates would come into sharper focus around the turn of the year.

In an interview on BBC radio on Friday, Deputy Governor Minouche Shafik denied that the Bank’s attempts to give guidance on its plans for interest rates had been a failure.

“I don’t think that’s the case. Isn’t it better that the Bank of England give the public and the markets a sense of what our best collective judgement is of what’s going to happen in the economy than to catch people by surprise?,” Shafik said.

Reuters

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.