Prospects for raising the interest rate should be regarded as good news for Britain, rather than as a cause for concern, according to Andy Haldane, chief economist of the Bank of England. In an interview with Sky News, Haldane said that he refers himself to the camp of officials of the Central Bank, who believe that the country’s economy “is approaching that point,” upon which it may be necessary to partially curtail incentives. Now the key rate of the regulator is at a record low of 0.25%, and its potential increase will be the first in more than 10 years.
“This will be a sign of economic recovery and, consequently, of adaptation to this process,” the economist stressed. “So instead of fears, the possibility of tightening should be seen as good news and a signal about the stability of the economy.” Haldane’s comments were another signal that the Bank of England was approaching tightening policy only a year after the stimulus was expanded in response to a referendum on the withdrawal of Britain from the EU. Head of the Central Bank Mark Carney and member of the Committee for Monetary Policy Sertjan Vlige also see opportunities to increase the cost of lending in the coming months, while two other representatives of the bank are already voting for tougher. But one can not help but notice the concern over the fact that after last year’s referendum in the country’s economy there have been changes. The fall of the pound triggered an acceleration in inflation, and Carney said that the potential for economic growth could be undermined. The pound reacted very restrainedly to this news, continuing to consolidate in a narrow range with a downward trend.
Haldane’s speech took place on the eve of a conference of the Bank of England, which celebrates the 20th anniversary of its independence. The event will be made by Carney himself and Prime Minister Teresa May, who mentioned in preliminary comments that the new and defining characteristics of the Central Banks are “open and transparent”. Last year, she criticized the ultra-soft monetary policy for growing inequality. The hawkish attitude of the Bank of England in the September meeting forced investors to reassess their expectations regarding the November rate hike. With respect to the growth rates of wages, which remain sluggish even in the conditions of unemployment at the 40-year low, Haldane pointed to the emergence of more “encouraging” signs