View more on these topics

MPC member to vote for rate hike early next year

Monetary policy committee member David Miles says he is likely to vote to increase interest rates before leaving the committee next May.

Writing in The Telegraph, the former Morgan Stanley banker said the UK economy had recently begun to see signs of a sustained recovery and likened the raising of base rate to “scaling back the emergency medicine as the patient begins their recovery.”

Miles says: “Having the rate at 0.5 per cent is obviously not a normal or sustainable setting for monetary policy. We have had such low rates because the economy took a huge hit in the aftermath of the crisis of 2008.”

He notes spare capacity in the economy, such as low wages, means an immediate rise is not required and that he expects to vote for an increase before May 2015 when he leaves the committee.

He says: “There is still slack in the economy so the stimulus given by very low interest rates is not something that is required right now.”

The MPC member also says any increases will be gradual and the rate will likely be lower than the 5 per cent average over the 10 years before the crisis.

Miles adds: “The level of base rate to which we might get at the end of a period of gradual normalisation is likely to be lower than the rate consistent with inflation being at target before the financial crisis.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com