The deputy governor of the Bank of England has stated that the bank should not be tempted to increase interest rates due to “imponderables” within the UK economy. The comments from Ben Broadbent, an ally of the governor of the Bank of England, Mark Carney, and a member of the Monetary Policy Committee (MPC), were published in an interview in mid-July and have suggested that any chance of borrowing costs rising soon are incredibly slim.
The deputy governor explained that he had kept the overall mood of businesses at the centre of his analysis, and that the MPC had found it incredibly hard to determine whether a significant improvement had been seen. As such, Mr. Broadbent declared that when it came to raising rates, he is “not ready to do it yet”.
His opinion had been eagerly awaited by investors ever since the MPC came close to raising interest rates in June, which would have marked the first increase for ten years had it happened. Mr. Broadbent had not made a public comment since then, and his views have been considered by a number of financial analysts to be essential in determining how likely it is we’ll see a rate hike in the near future.
Whilst Mr. Broadbent described economic growth over the last year as adequate, he explained that “the imponderables” included still being between one and two years away from knowing what Brexit will mean for companies. This follows his assertion during a speech earlier in July that reduced trade between Britain and the EU would create price rises and cause harm to both economies.
The deputy governor’s comments come only a short time after the Bank of England expressed concern over the increase in borrowing through credit cards and personal loans by families in Britain. Low interest rates may have contributed to this, as these, along with cheap money, are likely to have encouraged people to take on more debt which may end up causing them greater problems in the future.