THERE is no compelling case to change monetary policy right now given the uncertainty about the degree of slack in the economy and stubborn above-target inflation, Bank of England policymaker Martin Weale said.
In comments published yesterday, Weale struck a balanced tone and suggested he was in no rush to either raise interest rates from their record low of 0.5 per cent or expand the Bank’s quantitative easing to stimulate the economy.
“At the present time a majority of the Committee does not see a compelling case either for slackening or for tightening policy,” Weale said. “This does not mean of course that we cannot make up our minds... we think, at least for the time being, that the right course is to leave policy unchanged.” The central bank has kept interest rates steady for almost two years and pumped £200bn of new money into the economy by buying up bonds, but policymakers are now split on what to do next.
Last month Adam Posen voted for a £50bn expansion of QE, while Andrew Sentance repeated his call for a 25 basis point rise in interest rates.
The minutes of this month’s meeting are released tomorrow.
City A.M. Reporter