The Bank of England should wait and see how Brexit unfolds before deciding its n...
LONDON - The Bank of England should wait and see how Brexit unfolds before deciding its next move on interest rates, given that inflation is “reasonably well behaved” and economic growth is modest, rate-setter Michael Saunders said on Wednesday.
Britain is scheduled to leave the EU on March 29 but May is seeking last-minute concessions from Brussels to secure parliamentary approval and avoid a damaging no-transition exit. May has also raised the possibility of a delay to Brexit “The possibility that monetary tightening might be needed in the future does not necessarily mean we need to tighten now,” Saunders said in a speech at Imperial College in London.
Saunders, answering questions after his speech, said the BoE’s plan to raise rates gradually in the event of a Brexit deal did not mean a “fantastically slow” pace of increases. Most of Saunders’ speech concerned the smaller-than-usual effect of the BoE’s last two rate hikes on rates paid by households for loans and received for savings, possibly linked to the ultra-low level of policy rates over the last decade.
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