- Charlie Bean, outgoing BoE monetary policymaker
A day, when the Bank of England will increase the base rate from its all-time low, is looming, still providing the central bank with some time to communicate and prepare markets and public for a change in the monetary stance. Since March 2009, the base interest rate has been set at record low level and has been accompanied by extraordinary measures in the form of asset purchases. More and more economists have been arguing for an exit from such a loose policy, saying that the U.K. economy has gained enough momentum to keep its growth pace and that macroprudential tools and banks are ready to absorb or avoid shocks to financial markets.
Despite a premature exit from the first forward guidance phase, the Bank of England has been declining calls for it to review its policy while maintaining its stance of keeping the base rate unchanged to provide the economy with more time to rebalance output and spread wealth across the country. All in all, forward guidance and ultra-loose policies have proved to be essential for the economy to reach escape velocity after one of the most severe financial crises. However, it is believed that the exit from the extraordinary monetary stance will not be easy, but is expected to take place either in the last quarter of this year or in the beginning of 2015.
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