LONDON (MNI) – Bank of England Monetary Policy Committee member Ben
Broadbent said when he joined the MPC earlier this year he was on the
hawkish side of the policy debate, but is now on the middle ground.
In a BBC Radio 4 interview, Broadbent said the growth oulook had
worsened domestically and globally, high inflation had not fed through
to higher wages and he had dropped his hawkish views.
“I was probably on that (hawkish) side of the debate when I arrived
at the Bank earlier this year,” Broadbent said.
“At that time I thought that the global economy, while not growing
very quickly was growing at a reasonable rate. I was concerned that a
long period of above target inflation might dislodge some medium term
expectations of future inflation and find their way into other prices
and wages,” he added.
“But that hasn’t happened and … the outlook for growth
domestically, as well as globally, has weakened in the last three or
four months so I would describe myself now as much more in the middle of
the debate,” Broadbent said.
He said UK productivity growth had been exceptionally weak and as a
result “the capacity of the economy to grow without inflation is also
lower.”
Despite this he left the door open to further policy easing.
“Even allowing for this (productivity) hit we have had, we still
believe there is significant spare capacity in the economy and that
means that interest rates are low and that if that oulook changed in a
way which would lower the prospects for inflation over the medium term
maybe more could be done,” he said.
“But at the moment the judgement is that the economy recovers to
somewhere where spare capacity is eaten up and that the stance of policy
is therefore appropriate,” Broadbent said.
–London newsroom: 4420 7 862 7491; email: ukeditorial@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
