Bank’s Weale points to early 2015 rate hike
BANK of England policymaker Martin Weale has revealed his own estimate of when monetary policy might tighten, suggesting a rate hike could come before the middle of next year.
Weale added: “Obviously I couldn’t rule out the need for a rate rise coming earlier than that”.
The monetary policy committee (MPC) member said yesterday that he disagreed with the Bank’s consensus view on how much slack there was in the economy. According to the latest estimate in the February inflation report, the economy is around 1.5 per cent away from full capacity.
The remarks made in an interview with Sky News run against those made by MPC member David Miles earlier this week. Miles said that there may be more slack than is currently suspected.
“We had suggested that with the amendments to forward guidance linking the future path of interest rates to the somewhat fuzzy concept amount of spare capacity in the economy, communication by the Bank of England would become ever more important, and Martin Weale has certainly delivered,” said Howard Archer of IHS Global Insight.
The next general election is also extremely likely to occur in the second quarter of 2015, when Weale suggested that the first rate hike since the recession could be signed off.
He added: “During an election campaign it would obviously be difficult, but the election campaign will last for three weeks”.