BoE’s Broadbent says UK better placed for rate increase

Ben Broadbent Bank of England (BoE) Deputy Governor told the BBC that he thnks the UK’s economy is “a little bit” better placed for a small rate rise. However, he did not offer a timescale.

“I think there may be some possibility for interest rates to go up a little bit,” he said. At the same time, he warned, “One shouldn’t overdo this. If and when it happens there will be a lot of talk about the first rate rise since ‘x’. But it’s just a rate rise and we got perfectly used to rate rises of this size in the past.”

Recall, Mr. Broadbent voted to keep interest rates on hold this month.

The official also said the BoE expected the wage growth to peak in the near future. “We think inflation peaks through the second half of this year, and will just begin to edge down through next year and we also think that wage growth will pick up a little later on,” he stated. “Certainly over the next three years we expect faster wage growth,” he added.

Referring to the weakening of the pound since the Brexit referendum last year, Broadbent says a weak currency should naturally boost the UK exporter-oriented companies. He noted, “That would usually lead to investment by those companies, but that is not happening – we think that is to do with the uncertainty about the Brexit process.”