–Repeats Item From Weekend Press
LONDON (MNI) – Bank of England Chief Economist Spencer Dale said he
is not at all confident the UK’s economic recovery has taken hold, but
he is even more concerned about the rise in inflation.
In an interview published at the weekend by the Financial Times
Dale, who has been in the minority on the Monetary Policy Commitee in
backing a rate hike, made clear he believed the MPC could no longer
afford to hold fire until it was clear the economy was recovering
strongly.
His colleague, BOE Deputy Governor Charles Bean, has described a
“nasty” rate hike as one made to counter inflation which is not due to a
strenghtening recovery. Dale said he was not happy backing a “nasty”
hike, but felt one was needed.
“I’m not particularly happy about voting to raise interest rates
and doing it for nasty reasons”, Dale said.
“I don’t take lightly the impact this could have on some families.
But I think the cost to our economy as a whole – were inflation to
persist for longer and our credibility start to be eroded – would be
even worse,” Dale added.
He was downbeat about the UK’s economic recovery, with recent data
showing growth still appearing to be below trend.
“I’m not at all confident that the recovery has taken hold and will
definitely power away … however, I’m even more worried about what’s
going on in terms of inflation,” Dale said.
In the April and May minutes of the MPC’s monthly meetings, Dale
was one of two members who backed a rate hike but described the case as
“finely balanced.”
He also said, however, at the May meeting that the BOE’s latest
Inflation Report reinforced the case for a hike.
The FT interview should remove any lingering doubts that, unless
the outlook changes dramatically, with inflation running at more than
double the MPC’s 2.0% target Dale will continue to vote for a rate hike
in the months to come.
–London newsroom: 4420 7862 7491; email: drobinson@marketnews.com
[TOPICS: M$B$$$,M$$BE$,MT$$$$]
