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BoE's Broadbent denies mixed signals on interest rates
Bank of England deputy governor Ben Broadbent on Friday denied that mixed messages were being given on interest rates after the central bank seemed to swing back to a more dovish stance.
A day earlier, the Bank of England's monetary policy committee voted 7-2 to keep interest rates on hold, as well as downgrading its outlook on the UK's growth and inflation.
The majority of the MPC felt it was best to wait and see how the data unfolded over the coming months after what the committee felt was a "temporary soft patch" that led to soft first-quarter growth 0.1% on gross domestic product. In fact the committee expects the estimate of quarter-on-quarter GDP growth in the first quarter to be revised up to 0.3% and expects growth of 0.4% in the second quarter.
But less just a couple of weeks earlier the market had been supremely confident that the Bank would raise rates in May. The previous MPC meeting in March had seemed to indicate that the door had been left open to increase rates.
Broadbent denied that the committee was sending out mixed signals: "We have given some guidance that we are going to raise rates over the next few years but that has never been a promise that we are going to raise rates at a particular point in time."
"If you read what we said in the early part of the year it was clearly a conditional statement. It says if the economy turns out in line with the forecast then interest rate rises may comes sooner than people expected."
He reiterated comments from governor Mark Carney that rates will not need to rise by much, saying that the committee believe that the level of interest rates that will be needed over time "is materially lower than before the crisis".
This, he says, is the most important message the Bank has to give British households.
Carney said in interviews late the previous day that "it's likely" that rates will rise by the end of the year.