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.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
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 Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. 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.