"My personal view is that, in the current environment, a rate rise would increase unnecessarily the chances of the economy falling below critical velocity, thereby extending the period inflation remains below target"
- Andy Haldane, BoE Chief Economist
Andy Haldane, the Bank of England's chief economist, argued against an interest rate hike in the near future as wage growth fizzled and the outlook for the global economy remained uncertain. Haldane reiterated his view that the central bank's next move might be even a rate cut rather than lift as the UK economy appeared to be losing steam. Haldane, considered to be the most cautious policy maker when it comes to the timing of an interest rate hike, had previously warned that the global economy might be heading into a new crisis triggered by slower growth in emerging markets. The economist also talked about the structural changes within the British labour market and its effect on productivity, wage growth and the overall economy. The MPC was surprised about weak wage growth relative to the overall strength of the nation's economy and tightening labour market.
Last week, eight of the Bank's rate-setters voted to keep to keep rates at 0.5%, where they have remained since the height of the financial crisis in 2009, and only one voted for a hike. The first increase is now projected in late 2016. Forecasts were put back after the BoE's last inflation report in which the central bank said the outlook for global growth had weakened.
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