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Economic News

BoE's Haskel calls for more evidence inflation is under control

By Abigail Townsend

Date: Friday 09 Feb 2024

LONDON (ShareCast) - (Sharecast News) - The Bank of England's Jonathan Haskel warned on Friday more evidence that inflation was under control was needed before he would vote in favour of cutting interest rates.
The external member of the rate-setting Monetary Policy Committee - who last week voted to up the cost of borrowing - told Reuters: "I'm not going to apologise for banging on about persistence, because I think we're right to."

The economics professor welcomed recent falls in inflation, to 4% in December from a peak of 11.1% in October 2022. "The signs that we've seen thus far are encouraging," he said.

"I don't think we've seen quite enough signs yet. But if we accumulate more evidence on persistence then by the very logic I've just set out, I'd be happy to change my vote."

Interest rates are currently at a 15-year high of 5.25%. The MPC has hiked rates 14 times since December 2021, as it looked to tackle surging inflation.

Since August, however, it has left rates on hold, with most analysts expecting the next move will be a cut later this year.

But at last week's meeting, Haskel and fellow external member Catherine Mann both voted for a further rise, to 5.5%, citing ongoing concerns about persistent inflationary pressures.

Swati Dhingra opted for a cut of the same size. The majority, however, voted for rates to be left on hold.

Haskel told Reuters that his surprise decision last week had been "finely balanced".

The BoE expects headline inflation to hit its long-term 2% target in the spring before edging up again at the end of the year.

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