Gertjan Vlieghe, the only member of the Bank of England’s Monetary Policy Committee who voted to reduce interest rates last week, has warned that the UK will need more than a cut to counter the impact of the Brexit vote on the economy.
In an article published in the Financial Times Vlieghe said a reduction of the Base Rate will need to be used in conjunction with additional measures.
His comments come hot on the heels of those made by fellow MPC member Andy Haldane who said the Bank could do more then cut rates in August as it looks to shore up the economy (full story here).
In his FT article Vlieghe said: “The precise implications for the economy are uncertain, although the general direction of travel is likely to be lower growth and higher inflation for a period, as a result of weaker demand, weaker supply and a lower exchange rate.
“Early indications from business and consumer surveys, as well as the findings of the BoE’s own agents, support that assessment.
“In financial markets, inflation expectations beyond the next few years have actually fallen further since the referendum, from already low levels.
“I favoured an immediate interest rate cut, to be supplemented by a package of additional measures in August. What precisely that package should look like will have to be discussed over the course of the next three weeks.”
Vlieghe was the only member of the Bank’s nine-strong committee to vote in favour of a rate cut in the July meeting. The next MPC statement is due on August 4.