BANK of England rate-setter David Miles said yesterday that the UK economy could be on the verge of a self-sustaining recovery, yet warned that unemployment may not fall as quickly as some people are hoping.
Miles also leapt to the defence of governor Mark Carney’s provision of forward guidance, denying that it has had an opposite impact on markets than the one intended.
“My interpretation is that a lot of those market moves in interest rates and exchange rates are really a response to positive economic news,” said Miles, who sits on the Bank’s monetary policy committee.
Miles said that without forward guidance people could worry that a rise in Bank rate is imminent.
On the economy, he said there are positive signs for the UK: “We may be transitioning to a much more favourable trajectory where optimism becomes self-reinforcing and self-confirming.”