View Full Version : UK to see one or two rate rises per year, BoE's Vlieghe predicts

Martin@AS Financial
23rd March 2018, 15:16
Taken from The Financial Reporter:

Gertjan Vlieghe, external MPC member at the Bank of England, says the current central outlook for interest rates is "consistent with one or two quarter point rate increases per year over the forecast period".

Discussing the changing risks to growth and inflation and the implications for monetary policy in Birmingham today, Vlieghe said his view is provided the balance between global tailwinds and Brexit headwinds remains where it is now.

He added that since the quarter point rise in November, "the data have shifted further in the direction that warrants a continuation of the removal of monetary stimulus over the forecast period".

MPC members have begun to consider a further 0.25% rate rise, with two of the nine members voting to increase rates at the latest meeting this week.

Vlieghe says the one or two rate rises per year "would bring us closer to the neutral policy rate, which I continue to think is likely to be well below the neutral rate that prevailed in the pre-crisis decades".

He concluded: "There is significant uncertainty about the path of rates, and both lower and higher paths are possible, depending on how the economy evolves. While I think it is useful to provide a snapshot of how today’s central growth and inflation forecast map into my view of the likely central path of interest rates, this is a forecast, not a promise.

"If growth and inflation turn out differently from this central forecast, the path of interest rates will be different too. That should not be seen as a mistake, or a breaking of an earlier promise.

"It should be seen for what it is, namely an appropriate response to a changed economic outlook. The only promise that all members of the MPC can and do make is to continue to respond to the data to ensure that inflation returns to its 2% target."

24th March 2018, 00:19
So, what is the forecast period?

One or two rises, then pause for another 3 - 5 years before the next rise, is my punt.

24th March 2018, 08:52
Low interest rates only served the banks by giving them free money to invest in China and India.
The plebs had to pay through the nose for loans.
The BOA on serves the interests of the Banks which are subsidised by the taxpayers.
The UK is run by Banks and the Daily Mail.