Keep calm and carry on over interest rates, says Bank of England policymaker

A Bank of England policymaker has said it is too early to slash interest rates until there is more evidence of an economic hit from the Brexit vote and said rate-setters should "keep calm and carry on".

Keep calm and carry on over interest rates, says Bank of England policymaker

A Bank of England policymaker has said it is too early to slash interest rates until there is more evidence of an economic hit from the Brexit vote and said rate-setters should "keep calm and carry on".

Kristin Forbes, one of the Bank's nine-strong Monetary Policy Committee (MPC), said there was no need to rush into a rate cut, adding that the impact on growth of the UK's decision to quit the EU would be slow moving.

Economists have pencilled in a rate cut next month after the Bank said last week that most MPC members expected to take action to boost the economy in August.

But writing in the Daily Telegraph, Ms Forbes said: "There may be a case to adjust monetary policy soon, but until more hard data is available, I believe this is a good time to 'keep calm and carry on'."

Her comments echo those made on Monday by fellow MPC member Martin Weale, who questioned whether interest rates would need to be cut next month.

Mr Weale said the Bank was "not a nurse to markets" and there were no signs that consumers or businesses were "panic-struck" following the Brexit decision.

Ms Forbes said the economy was not facing woes on a scale seen in the financial crisis, with financial markets having "stabilised" after initial "panic", while she stressed spending data "do not suggest consumers are cutting back".

She wrote: "This is not 2008. Then markets were collapsing, the financial system stopped functioning, and the global economy was entering a recession. This is not a 'Lehman moment'."

She said while there was a "valid case" to reduce rates from the already historic low of 0.5% or restart the Bank's quantitative easing programme to bolster the Britain’s economy, there was a "dearth" of official data on the economic response to the referendum.

Action taken so far to ease rules offering banks up to another £150bn of lending firepower, together with the weaker pound, had already helped shore up the UK’s economy, she added.

She warned that there were also costs of cutting rates further, with savers set to earn less on their nest eggs and banks making less money on lending.

Figures from the Bank on Wednesday suggested there was "no clear evidence" of a sharp economic slowdown, with firms trying to maintain "business as usual" despite increased uncertainty.

more courts articles

Gary Glitter victim seeking six-figure sum in damages, court told Gary Glitter victim seeking six-figure sum in damages, court told
Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited