LONDON (MNI) – Paul Fisher, Executive Director, Markets and
Monetary Policy Committee member at the Bank of England has said that he
is extremely “nervous and worried” about consumer consumption, according
to an interview in the Scotsman newspaper.
“There was no real growth in consumption in 2010 at all,” Fisher
said in an interview published Tuesday.
“We’ve had three years where real household post-tax income has
been flat so I am quite nervous that the wrong sort of shocks could
prolong the (current] period of weakness,” he said.
Fisher also underlined the difficulties the Bank’s MPC currently
has when facing up to the challenge of higher inflation.
“It’s a very uncertain picture around which we don’t have a lot of
confidence. But our central expectation is for inflation to fall back to
the target,” he said.
“We could very easily see a sharp fall back in inflation if
commodity prices were to fall for example,” he added.
Fisher, said that although the current high cost of living was
“uncomfortable” for households, he would only join the MPC’s hawks if he
saw any evidence that the rate of inflation was effecting wage
bartering.
“At the moment, if anything wages look a bit too low rather than
too high,” he said.
“So as long as that remains the case, it’s very uncomfortable for
everybody but it means inflation is not getting embedded into the system
and it will come back,” he added.
Fisher also said that it wasn’t “right” to add an interest rate
rise to the pressures already facing households.
However he warned that the UK should prepare for the fact that
rate normalisation over the next few years.
Fisher is reported as having said that he would “somewhat
reluctantly” consider further QE if inflation fell below target.
–London newsroom: 00 44 20 7 862 7492; email:ukeditorial@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
