(Bloomberg) -- Bank of England policy maker Gertjan Vlieghe said he will vote for an interest-rate cut this month if there are no signs of the economy improving after the general election, the Financial Times reported.
Vlieghe said in an interview that data released later this month would shape his view on whether to keep waiting for an economic revival or vote to reduce the rate from 0.75% to 0.5%.
“Personally I think it’s been a close call, therefore it doesn’t take much data to swing it one way or the other and the next few [MPC] meetings are absolutely live,” he was quoted as saying. “I really need to see an imminent and significant improvement in the U.K. data to justify waiting a little bit longer.”
His comments come after Governor Mark Carney said the bank is debating the merits of action and has plenty of firepower if necessary. Monetary Policy Committee member Silvana Tenreyro has also said she may support an interest-rate reduction in the next few months if sluggish global growth and Brexit uncertainty persist.
Despite a slowdown in global growth and Brexit uncertainty, the BOE was one of the few major central banks that didn’t join the global monetary policy easing of 2019. Data to be published prior to the BOE’s next rate decision on Jan. 30 include figures on inflation, unemployment and manufacturing.
What Our Economists Say:
“The debate on the MPC around the need for stimulus is finely balanced. Tentative signs of a rebound in the data, lower uncertainty and the prospect of a big fiscal boost mean we think the committee will hold fire but the tolerance for downside surprises is clearly low.”
-- Dan Hanson, Bloomberg Economics
So far, the picture has been mixed. Final purchasing managers’ indexes showed the dominant services sector strengthened at the end of the year following Prime Minister Boris Johnson’s decisive election victory, while hiring and business sentiment climbed.
Yet consumers, often the bellwether of the British economy, showed signs of losing momentum as retail sales posted their worst year on record and big chains reported an increasingly tough retail environment over the Christmas period.
--With assistance from Catherine Bosley.
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