Weale: Rates may not be cut in August

Ryan Fowler

July 18, 2016

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Bank of England policymaker Martin Weale has become the latest member to speak out on interest rates saying they may not be cut in August.

In a speech at the Resolution Foundation in London Weale said he was not convinced that rates needed to be cut further to stabalise the economy following the EU referendum.

He said: “People who trade in markets know that the Monetary Policy Committee sets policy month by month in the way that its members think appropriate.

Industry reacts to BoE rate cut

“It does sometimes, as we did in our July meeting, give an indication of where policy may go in the future. But that is no more than the best judgement at the time and not in any sense a commitment; the public understand that.”

Weale added that he was unsure if there was panic in UK homes and firms as of yet.

He said: “In contrast to the experience of 2008, I do not have any sense that either consumers or businesses are panic-struck and, as I observed, there have been no material signs of financial panic.”

The central bank had been widely tipped to reduce interest rates by a minimum of 0.25% in the wake of the referendum but a cut never materialised.

And since then there have been conflicting reports coming from MPC members.

Earlier today Gertjan Vlieghe, the only member of the MPC 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.

He said a reduction to the Base Rate would be needed as part of a suite of measures to keep the market from falling too far into recession (full story here).

And last week Andy Haldane, the Bank of England’s chief economist and also an MPC member, said the Bank could do more then cut rates in August as it looks to shore up the economy (full story here).

Should Weale have his way the MPC could now vote to boost quantitative easing or launch new measures to encourage banks to lend to businesses and consumers.