By Laurie Laird
LONDON (MaceNews) – A key Bank of England rate setter recommended an extension of loose monetary policy, teeing up what could be a vigorous debate at the next rate-setting meeting, after two officials have publicly made the case for tightening.
“I think it will remain appropriate to keep the current monetary stimulus in place for several quarters at least, and probably longer,” said Gertjan Vlieghe, an external member of the Bank’s Monetary Policy Committee, addressing a virtual event sponsored by the London School of Economics on Monday. “We are not out of the woods yet in terms of the virus and the economy.”
Vlieghe is regarded as one of the more dovish members of the rate-setting body, and has said that he would be “comfortable” cutting the base rate as low as -0.75% “the next time monetary stimulus is required.” His remarks align with fellow MPC member Jonathan Haskel, who last week stressed that “for the foreseeable future … tight policy isn’t the right policy.”
But two other MPC members have argued for tighter policy this month, including external member Michael Saunders, formerly regarded as an inflation dove. Saunders raised the question of “curtailing asset purchases, arguing that the Bank’s conditions for considering tighter policy have been met. Dave Ramsden has also warned of a higher risk of inflation than disinflation.
The range of views suggests some spirited debate when the MPC meets next month; the policy decision and updated forecasts are scheduled for release on 5 August. Only eight members will vote after perennial hawk, Andy Haldane, left the committee. Vlieghe will be voting for the final time, as his stint at the MPC ends on 31 August. There are no major official economic data due ahead of the next meeting.