MPC member ready to cut interest rates

13-01-2020

An influential member of the Bank of England’s monetary policy committee has said he would vote for a cut in interest rates later this month if key data do not show a bounce in the economy following the December general election. Cut in interest rates

Gertjan Vlieghe, an external MPC member, said his view on whether to keep waiting for an economic revival or vote to lower rates from 0.75 percent to 0.5 percent would depend on survey data released towards the end of January.

“Personally I think it’s been a close call, therefore it doesn’t take much data to swing it one way or the other and the next few [MPC] meetings are absolutely live,” he told the Financial Times.

“I really need to see an imminent and significant improvement in the UK data to justify waiting a little bit longer.”

Mr Vlieghe has been a pivotal MPC member in the past: a hawkish speech by him in September 2017 foreshadowed the first BoE rate rise for a decade, which took effect two months later.

On Friday, Silvana Tenreyro, another external MPC member, told a Westminster conference she could also vote for a rate cut “in the coming months” if there was no sign of a pick-up in the economy.

She said if uncertainty over a post-Brexit trade deal between the UK and the EU continued to weigh on demand, “my inclination is towards voting for a cut in rates in the near term”.

At the last MPC meeting in December, the nine-member committee voted 7-2 against cutting rates.

But if Mr Vlieghe and Ms Tenreyro joined Jonathan Haskell and Michael Saunders, two other external MPC members who have voted for a rate cut since November, they would only be one short of a majority in favor of the looser monetary policy.

News Source: Financial Times