BOE’s Cunliffe says timing of BOE hike an open question

Comments from the BOE’s Cunliffe

  • Doesn’t want to anticipate November rate decision but «for me the economy has clearly slowed»
  • Rates will not need to go up as far or as fast as pre-crisis
  • I don’t see London as a financial centre being replicated on the continent anytime soon
  • He spoke to Wales Online

Dovish stuff.

Here’s the quote:

 «I am not going to try and anticipate the meeting, but for me the economy has clearly slowed this year.

«It has slowed because of the squeeze we have seen on real incomes and imported inflation from the depreciation [sterling] that has come in. And pay has remained relatively subdued.

«In our August forecast we forecast that rate of growth [GDP] of about 1.5% a year, and it is going to continue for the next two to three years. And pay is going to gradually pick up from around 2% to around 3.5% by the end [three year forecast period].

«And that is going to put some domestic pressure on inflation, as the imported inflation eases off. Now if that forecast comes to pass over the forecast period, interest rates will need to go up.

«They will not need to go up by as far and as fast as they did before the crisis, but over the forecast period of three years rates will need to rise. The exact timing of when that starts? Well, that for me is a more open question.»

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