BoE’s Vlieghe says ‘relaxed’ about waiting to hike rates


Bank of England policymaker Gertjan Vlieghe said in a newspaper interview published on Saturday he was relaxed about waiting longer before deciding to raise interest rates from record low levels.

Vlieghe, a former hedge fund economist and the newest member of the BoE’s Monetary Policy Committee, described as “huge” the tightening effect of the strong pound on British monetary policy.

He told the Sunday Times he wanted to see British economic growth stabilise or pick up before being persuaded of the need for higher rates.

Britain outpaced all other major advanced economies in 2014 but official data last week showed the pace of recovery slowed in the third quarter of this year, dented by trade as global growth weakened.

“I am relaxed about waiting a little longer before we start,” he said, adding there had been “a little bit of disappointment” on wage growth.

Sterling hit a three-month high against the euro earlier this month, as expectation of more stimulus from the European Central Bank weakened the euro.

“We’ve had a huge tightening from the exchange rate,” said Vlieghe, who added that he would probably prefer to cut interest rates than undertake another round of quantitative easing, if the BoE had to act against another downturn.

The Sunday Times quoted Vlieghe as dismissing the notion that central banks should raise interest rates to have ammunition against the next downturn, as this strategy would “create the slowdown” that they worry about.

Economists polled by Reuters expect the BoE to raise rates from 0.5 percent in the second quarter of 2016, although many say the timing may rest on whether the U.S. Federal Reserve tightens policy in December.

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