BOE’s Chief Economist Says May Need to Cut Rates

The Bank of England’s chief economist said Friday it may be necessary to cut interest rates in the U.K. to get inflation back to target, a stance that puts him at odds with governor Mark Carney’s view that borrowing costs will likely need to rise soon.

Andrew Haldane said in a speech in Portadown, Northern Ireland, that in his view, the case for a rate increase is “some way from being made,” given the weakness of inflation in the U.K. and signs of a slowdown in growth.

He said the risks to growth and inflation are “skewed squarely and significantly to the downside,” according to a text of his speech, and that if price growth doesn’t accelerate “there could be a need to loosen rather than tighten the monetary reins as a next step to support U.K. growth and return inflation to target.”

Mr. Haldane’s remarks show that divisions remain among BOE officials over the need to change course after almost a decade of holding interest rates at a record low.

Market Watch

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam