BoE Deputy Governor Backs Carney on Holding Rates

The battle lines for a key Bank of England decision on interest rates have been made clearer after deputy governor Sir Jon Cunliffe became the latest Threadneedle Street official to voice publicly his opposition to higher borrowing costs.

Cunliffe came to the support of the governor, Mark Carney, in saying that it was not yet time to raise interest rates – setting the scene for one of the most closely fought decisions of the Bank’s monetary policy committee when it meets early next month.

The MPC voted 5-3 in favour of leaving rates on hold at 0.25% at its most recent meeting, but the City was taken aback when the Bank’s chief economist, Andy Haldane, said he had been close to abandoning his no-change stance.

Haldane’s comments raised speculation that the Bank is coming close to reversing the emergency quarter-point cut in official borrowing costs made in August 2016 when the MPC was seeking to shore up confidence in the wake of the Brexit vote.

But Cunliffe said that raising interest rates at the current time was not desirable because it would add to the squeeze on living standards caused by prices rising more quickly than wages.

via The Guardian

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