‘Interest rates not set to rise yet’
July 23, 2010 at 3:40 pm
It looks like interest rates are not set to rise for a while yet after the latest member to join the Bank of England’s MPC (Monetary Policy Committee), David Miles, announced that, according to his judgement, it was still too early to consider putting interest rates up.
The MPC is responsible for setting interest rates, and Miles joined just over a year ago. He confirmed that there are still problems in the banking system, suggesting that this means economic growth in the country could still weaken.
He said that he looked forward to the day “when it will be appropriate to tighten monetary policy,” as this would mean a return to “more normal levels of interest rates” and “would be a welcome sign that economic conditions were also more normal”.
However, he confirmed that he believed we were not at that point yet.
He is not alone in his views about keeping interest rates at the record low of 0.5%, a level it has been held at since March 2009. Another MPC member, Adam Posen, has also suggested that an interest rise could risk a return to recession for the country at this stage.
However, one member disagrees with the other MPC members. The only member to suggest a rise was Andrew Sentence. His decision to vote for a rise was based on the fact that inflation currently stands at 3.2%, which is above the target of 2%.
David Miles’s comments were made in a speech to the Bristol Business Forum, and in a nutshell mean that the country has a bit of a way to go before things really start to look better.
