FRANKFURT (MNI) – Bank of England MPC member Martin Weale sees a
risk that the UK could slip back into recession, according to an
interview published Tuesday by the German business daily Handelsblatt.
“It would be naive to say that this risk does not exist,” in light
of past experience, Weale said.
This morning, the Bank of England will release its first estimate
of Q2 GDP for the UK, and markets will be concerned that further
sluggish growth forecasts will underscore the continued fragility of the
economy.
Consensus is for growth of 0.2% in Q2 following a increase of 0.5%
during Q1, which retraced the fall in the last quarter in 2010. Some
analysts fear growth could have been flat over the quarter, maybe even
negative.
Inflation in the UK stands at 4.2%, which is more than double the
BOE’s target rate of 2.0%. Weale and his colleague Spencer Dale have
been calling for an interest hike for several months. This would have
shown that the Bank of England was just as concerned about inflation
pressures as about growth prospects, Weale explained.
Weale argued that a 25 bps hike would have had only limited impact
on demand over a six-month period, but would have sent an important
signal that inflation was a clear concern.
— Frankfurt bureau: +49 69 720 142; email:frankfurt@marketnews.com
[TOPICS: M$B$$$,M$$BE$,M$G$$$,MT$$$$]
