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Bank chief economist at odds with Carney over rate rises

Andy Haldane plans to vote for a rate rise later this year as Bank governor says “now is not the time” for an increase

The chief economist of the Bank of England has revealed he may vote to raise interest rates in the second half of the year.

The BBC reports that Bank of England chief economist Andy Haldane has said leaving a rate hike until too late could lead to steeper rate rises in the future.

The Monetary Policy Committee this month voted to leave interest rates at their record low of 0.25 per cent for another month.

Mr Haldane has revealed he considered a rate rise in June but decided to wait.

Royal London Asset Management economist Ian Kernohan says: “Having thought there were only two hawks left on the MPC, it is now clear there are three.

“Mr Haldane clearly considers a tightening is needed well ahead of market expectations.”

The value of the pound climbed above $1.27 after Mr Haldane’s comments, having fallen earlier in the day following the Queen’s Speech.

But Bank governor Mark Carney said earlier in the week “now is not yet the time to begin” raising rates.

Carney said at the time: “From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.”

Kernohan adds: ‘Our own view is that the impact of political uncertainty on business confidence and the continued squeeze on household real incomes make a rate rise unlikely.’

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  1. The problem is Mark Carney has an agenda. He told the public that the pound would suffer if we voted to leave the EU.

    We did and whilst it had a dip it recovered. That won’t have looked good for Mr Carney but he had a secret little understood weapon, interest rates. He realised if he dropped interest rates the pound would suffer and no one would put two and two together, it would then appear that his prediction of us voting to leave was correct.

    To raise interests now would lift the pound and he wouldn’t want to do that.

    I might be full of conspiracy theories but it did seem odd to drop interest rates when he did, it was not as if it had any other material effect other than weakening the pound.

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