Bank of England Deputy Hints at August Rate Risepened

A senior Bank of England policymaker has declared that the UK economy is emerging from its recent soft patch.

Deputy governor Dave Ramsden is telling an audience in London that recent data supports the bank’s view that the slowdown earlier this year was temporary.

The Bank’s Monetary Policy Committee (MPC) resisted raising interest rates in May, and Ramsden’s comments suggest a rate rise could come in August.

Ramsden says:

“It is still early days. We are still only two thirds of the way through the second quarter, less far through the second quarter data cycle, and only a month has passed since our last MPC meeting.

“Even so, the data we have had so far suggests our interpretation of the slowdown in the first quarter as temporary looks to be being borne out. Consumer confidence and consumer credit both picked up in the latest data, as did retail sales and several business surveys. That included the latest services PMI (purchasing managers’ index) output balance, representing 80% of the economy. So far at least our May judgement looks on track.

“Looking ahead, my central expectation for the economy is in line with the MPC’s best collective judgement as expressed in our inflation report forecasts. Global growth still looks solid, albeit a bit less rosy than it did before. The labour market is still robust. I expect GDP growth to resume at a steady but unspectacular pace and demand to continue to rotate away from consumption and towards trade and investment.”

Ramsden is seen as a dovish member of the MPC, having opposed last November’s rate hike.

courtesy : theguardian.com
photo : Telegraph

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