Bank of England's Martin Weale says an interest rate rise is less urgent

 
Lynsey Barber
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Martin Weale is more cautious about a rate rise (Source: Getty)

Bank of England rate setter Martin Weale has signalled a less hawkish tone on interest rates, saying the need for them to rise was "less immediate".

Downward pressure on inflation, weak wage growth and falling commodity prices has given the monetary policy committee (MPC) more breathing space than expected, Weale told the Daily Telegraph.

"I initially thought that the weak wage growth was a wobble that represented stray numbers that you get once or twice from time to time. There has plainly been something more to it than that."

Official figures last week revealed wage growth slowed.

The usually hawkish policy maker had said in September that a rate rise would come "relatively soon", however, the more dovish tone indicated that the BoE would not be following the lead of the Fed anytime soon after it raised rates for the first time in nearly a decade.

However, Weale said he believes earnings will pick up as the labour market tightens, and that rates would still rise ahead of market expectations. The consensus is that a hike will come at the end of 2016 or in early 2017.

"My sense is that to keep inflation on target, rates need to be at some point higher than markets imply. There are questions about exactly when, but I certainly find it hard to believe that the market curve is consistent with what I would be doing if I were staying on the MPC," he said.

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