LONDON (MNI) – Recent weak data, showing falls in house prices,
softer economic growth and falling consumer confidence, are evidence of
volatility rather than a new economic downtrend, Bank of England
Monetary Policy Committee member Andrew Sentance said in a question and
answer session Wednesday.
Sentance, who is continuing to back gradual monetary tightening,
said it was no suprise the data were volatile but denied they were the
evidence an economic downturn let alone a double dip recession.
“I am not surprised to see indicators of confidence and indeed
economic activity showing volatility. So we have to recognize that,”
Sentance said.
He argued that some of the weakness was a result of gloomy news
coverage rather than anything more fundamental.
“I think there have been particular factors operating over the
summer. There has been quite a gloomy wave of news emanating from the
US and we have also had a lot of concern being expressed about the
Spending Review,” Sentance said.
The Spending Review, due out Oct 20, will detail the government’s
spending cuts.
Sentance broke ranks with his MPC colleagues at the June meeting,
voting for a 25 basis point hike while the other seven members at that
meeting voted for no change in policy.
Sentance then voted for a hike in July, August and September, but
none of his colleagues backed him. The minutes of the October MPC
meeting have yet to be released. Analysts expect a three way split, with
Sentance again voting for a hike and MPC member Adam Posen at least
voting to relaunch quantitative easing.
In his speech, Sentance said he continued to believe starting to
tighten monetary policy now was “the right policy”.
–London newsroom: 00 44 20 7862 7491;e-mail: drobinson@marketnews.com
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