The Bank of England’s interest rate cut to 0.25% in August should be enough to prevent the economy from slipping into a recession, according to the most hawkish member of the central bank’s interest rate-setting committee.
Kristin Forbes said Britain had avoided the predicted economic shock following the vote to leave the European Union and should recover without the need for a cut in rates to nearer 0%.
“The economy is experiencing some chop, but no tsunami,” she said, adding: “The adverse winds could quickly pick up – and merit a stronger policy response. But recently they have shifted to a more favourable direction.”
Forbes, a member of the monetary policy since July 2014, is a professor at the Massachusetts Institute of Technology and considered an expert on financial crises. She backed a cut in interest rates in August from 0.5% to 0.25% after the economy appeared to stumble afterthe Brexit vote, but she refused to back a £60bn expansion of the bank’s quantitive easing programme and moves to buy riskier corporate bonds. At the time she said she was “particularly concerned about excessive stimulus at this stage”.
via The Guardian