Kristin Forbes argues against Bank of England interest rate cut

Jake Cordell
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Protest outside Bank of England
Kristin Forbes is protesting against interest rate cuts in a slightly more constructive way (Source: Getty)

Bank of England rate-setter Kristin Forbes has said the reassuring performance of the UK economy means she sees no need to cut interest rates later this year.

Forbes, a member of the Bank's monetary policy committee (MPC), told an audience at Imperial College in London she disagrees with the majority of her MPC colleagues that believe interest rates should be taken further towards zero to help protect the economy from the fallout of the EU referendum.

Forbes said: "I am not yet convinced that additional monetary easing will be necessary to support the economy. For now, the economy is experiencing some chop, but no tsunami.

"The adverse winds could quickly pick up - and merit a stronger policy response. But recently they have shifted to a more favourable direction."

Despite some strong economic data, the MPC has maintained its stance that interest rates will need to be cut to a level close to, but above, zero if the UK economy slows over the rest of the year. This morning, the Bank's other policy-making arm, the Financial Policy Committee (FPC), said the UK was facing a period of "heightened uncertainty" and "challenging" conditions in terms of financial stability.

Forbes is seen as one of the MPC's more hawkish members. She did not vote in favour of extending quantitative easing over the summer and was the only member of the MPC to oppose the plan for the Bank to buy corporate bonds.

Financial markets believe the Bank of England will cut rates at either its November or December policy meeting. Typically, the Bank would act in November, when its latest forecasts are published in the Inflation Report, although it may be tempted to hold off until after the Autumn Statement which takes place at the end of November to assess the government's economic response to the referendum.