BOE’s Ramsden Reins In Case for More Accommodative Policy
BOE’s Ramsden Sees Less of a Case for More Accommodative Policy
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Uncertainty over Brexit has damaged the U.K.’s “speed limit” for economic growth so much that it could hamper the Bank of England’s ability to help the economy by lowering borrowing costs, Deputy Governor Dave Ramsden said in an interview with the Daily Telegraph.
Ramsden also cited declining productivity, running at its slowest pace in five years, as well as falling business investment for his thinking.
In a world of what he called entrenched uncertainty, Ramsden said he sees “less of a case for a more accommodative monetary position.”
“Underlying growth has slowed through the year as Brexit uncertainty has really weighed,” Ramsden told the newspaper, a major supporter of Britain leaving the European Union.
Ramsden’s slightly more hawkish comments contrast with the recent mood music from the monetary policy committee. Its September meeting had a more dovish tone and a speech from previously hawkish Michael Saunders suggested the BOE may have to cut interest rates even if the U.K. avoids a no-deal Brexit.
The interview also heralds a week in which BOE policy makers are out in force, as they take advantage of one of their final chances for public statements before the quiet period ahead of the November inflation report.
Jon Cunliffe kicks off with a speech on Monday, before Tuesday sees Gertjan Vlieghe speak and Governor Mark Carney appear before Parliament. Attention will then turn to Washington, where Carney, along with Cunliffe, will appear at the International Monetary Fund‘s annual meeting.
Ramsden said another concern for the MPC is the government’s plan to boost spending during the next parliament, and its effect on public finances. Boris Johnson’s domestic policy agenda, to be set out Monday during the State Opening of Parliament, will include proposals to raise the National Living Wage and recruit more police.
“It’s clearly another factor for us to take into account,” Ramsden said. “After a long period, where fiscal policy was more of a headwind … that provides a tailwind to the forecast. So that’s more money going into the economy.”
Ramsden refused to comment on whether he had applied to replace outgoing Governor Carney. The MPC’s next policy decision is set for Nov. 7.
To contact the reporters on this story: James Ludden in New York at jludden@bloomberg.net;David Goodman in London at dgoodman28@bloomberg.net
To contact the editors responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net, Steve Geimann
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