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November 25, 2010    

BoE policymakers give views on economy

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by Kay Murchie

In two separate interviews, Bank of England policymakers, David Miles and Andrew Sentance, have both given their views on the UK economy.

David Miles said there is no rush to withdraw any stimulus but said the Bank must avoid taking action that could derail the recovery.

In an interview with the Northern Echo newspaper, Mr Miles said: “The last thing that we want to do is to take actions which knock the recovery on the head.”

However, he did join his fellow MPC member, Andrew Sentance, by saying inflation must be brought down.

Inflation has remained more persistent than expected - at 3.1% - the eleventh consecutive month that inflation has been above the target of 2%.

Mr Sentance has, at the last six rate-setting meetings, voted for interest rates to be lifted in order to combat inflation.

However, his fellow policy members do not share his view. Mr Sentance has previously warned that the Bank faces losing its credibility if it is not seen to be fighting inflation.

The remarks from both policymakers are unlikely to alter the view that the Bank of England will make any changes to monetary policy in the short-term.

However, Mr Sentance believes interest rates should be lifted gradually adding: “the speed with which we do that will need to take into account how conditions evolve in the economy and the progress we make in the recovery.”

Yesterday, the Office for National Statistics (ONS) revealed the UK economy grew by 0.8% in the July to September period – unrevised from its initial estimate last month.

Today’s estimate is the second reading, a third and final estimate will be available next month.

The ONS also confirmed that the economy grew by 2.8% on an annual basis.

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