- Andrew Haldane, BoE chief economist
Andrew Haldane, chief economist at the Bank of England, pointed that the benchmark interest rate will rise gradually over the course of the next couple of years in order to ensure a sustainable economic growth. Haldane said that the rate lift could be as slow as half a percentage point a year and did not expect interest rates returning to levels seen in 1980s or 1990s. The BoE has maintained interest rates at ultra-low of 0.5% for almost six years since the depths of the global financial crisis. Last week BoE Governor Mark Carney noted interest rates would need to rise over the course of the next three years to prevent inflation from overshooting the central bank's 2% goal. Also, Kristin Forbes, an MPC member, said the UK interest rates may start rising sooner than many analysts expect if inflation rebounds strongly after its recent precipitous decline. In January, the BoE voted unanimously to keep the base rate unchanged at the all-time low of 0.5% versus market expectations of an ongoing split among policy makers. Both Martin Weale and Ian McCafferty unexpectedly joined the rest of the seven members saying that "low inflation might persist for longer than the temporary factors implied and concluded that this risk would be increased by an increase in Bank Rate at the current juncture." Meanwhile, economists expect that the central bank will keep rates at a historic low until at least October as inflation remains below the BoE's target.
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