The Bank of England's (BoE) most dovish rate-setter, chief economist Andy Haldane, today said that the central bank's next interest rate move could be a cut rather than a widely-expected hike.
Speaking at the Portadown Chambers of Commerce in Northern Ireland Haldane said the balance of risks to UK growth and inflation are skewed "squarely and significantly to the downside".
"Were the downside risks I have discussed to materialise, there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target," he said.
His comments are markedly different to those of governor Mark Carney who recently told the Treasury Select Committee that sustained momentum in the UK economy, and a firming of underlying inflationary pressures, would put the rate decision into sharper relief around the turn of this year.
And Haldane's views are not being seen as indicative of a change in the Bank's approach by analysts.
"While there is currently considerable uncertainty as to when the BoE is likely to start raising interest rates, Andy Haldane’s stance looks isolated within the monetary policy committee," Howard Archer, chief UK and European economist at IHS, said.
The free-thinking economist also said that an era of low or negative interest rates would mean central bankers have to think more imaginatively about monetary policy.
One of a "non-exhaustive" list of options would be increasing inflation targets from two to four per cent, but he said this would be unpopular with the public, and could harm the Bank's reputation in the long-run.
A second option would involve allowing unconventional measures like quantitative easing to be used by the BoE in normal, as well as crisis, times. Yet this would undermine the credibility of monetary policy.
The third "most radical and durable option" involves utilising technology – possibly similar to that underpinning digital currencies such as bitcoin – to enable the bank to charge negative interest rates.
"Whether a variant of this technology could support central bank-issued digital currency is very much an open question," he said.
"That is why work on central bank–issued digital currencies forms a core part of the Bank’s current research agenda."