Bank of England policymaker Martin Weale said on Monday he was unsure if he would back an interest rate cut at next month’s BoE meeting, in contrast to most of his colleagues who think a cut is likely.
Weale – who will step down after next month’s meeting – said he did not see any sense of panic among consumers or businesses after Britain’s vote to leave the European Union last month, and that the central bank should not be afraid of disappointing markets.
The BoE held interest rates at 0.5 percent on Thursday, contrary to widespread expectations of a first cut in more than seven years. Governor Mark Carney said two weeks ago that he expected the BoE to give the economy more help over the summer.
“The Old Lady of Threadneedle Street is not a nurse to markets. People who trade in markets know that the Monetary Policy Committee sets policy month by month in the way that its members think appropriate,” Weale said.
“A second argument to which I give little weight is the argument that early action is needed to reassure people. In contrast to the experience of 2008, I do not have any sense that either consumers or businesses are panic-struck,” he added.
Weale said his decision on whether to back a rate cut next month would hinge on whether the short-run hit to economic demand from the vote to leave the EU would significantly outweigh the longer-run inflation pressures.