BANK of England chief economist Andy Haldane has given another sharp warning against an early interest rate rise, saying any such move could be “self-defeating.”
Speaking yesterday at the Open University, Haldane said that recent strong wage data had not changed his view about the dangers of tightening policy too soon. According to the most-recent data from the Office for National Statistics (ONS), wages have risen at 2.7 per cent, the fastest rate in five years.
But Haldane said yesterday that the other major economies were suffering from “lasting and durable” psychological scars from the recent recession, which could hold back growth and keep rates lower for longer.
“A policy of early lift-off could be self-defeating,” Haldane said.
“Looking ahead, I have no bias on either the size or the direction of future interest rate moves,” he added. Haldane’s comments diverged from recent statements from other Bank of England officials, such as Monetary Policy Committee (MPC) member Martin Weale, who said last month that stronger wage growth should be taken as a sign that interest rates may need to rise sooner rather than later.
The market predicts the first interest rate rise will come in May or June 2016, but the concensus of economists recommend March for a rise.