Bank of England heavyweight favours interest rate ‘stodginess’

Bank of England Deputy Governor Sir Jon Cunliffe has indicated a cautious approach to raising interest rates after saying that there remains a case for "a little stodginess".

Cunliffe, who was one of two members on the Monetary Policy Committee (MPC) to vote against a rise in interest rates last November, argued that wages did not seem to be rising as fast as the three per cent annual rate originally anticipated on Threadneedle Street.

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At the MPC's most recent meeting in June, three of its nine members, including Bank of England chief economist Andy Haldane, voted to increase the interest rate without delay.

Yet while many in the City have been suspecting the MPC's next vote on 2 August will lead to an interest rate hike, in a speech to businesses in Cumbria earlier today Cunliffe said: "Looking to the medium term, there remains a case for a little stodginess yet".

He also warned policymakers need to be wary of "false dawns" when it comes to wage growth.

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With the whole economy growing 0.2 per cent in the three months to the end of May, Cunliffe added that the data suggested "the domestic economy is likely to generate the relatively gentle inflation pressure necessary to meet the target over the next two years".

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