Bank of England chief economist Andrew Haldane says he is “gloomier” on the UK’s economic prospects and expects interest rates to stay lower for longer.
Speaking at Kenilworth Chamber of Trade breakfast today, Haldane said he has changed his view on the economy.
He says the Bank has shifted its thinking away from an early rate rise towards holding rates lower for longer.
The Monetary Policy Committee has held rates at 0.5 per cent for 67 consecutive months. Unemployment dropped to 6 per cent in August, its lowest levels since 2008, as inflation hit a five-year low of 1.2 per cent in September.
Last week Chancellor George Osborne said he is planning for lower growth rates because of an economic slowdown engulfing the Eurozone.
Haldane said: “Recent evidence, in the UK and globally, has shifted my probability distribution towards the lower tail. Put in rather plainer English, I am gloomier.
“That reflects the markdown in global growth, heightened geopolitical and financial risks and the weak pipeline of inflationary pressures from wages internally and commodity prices externally. Taken together, this implies interest rates could remain lower for longer, certainly than I had expected three months ago, without endangering the inflation target.”