When it comes to raising U.K. interest rates, it’s better to be late than early, according to Bank of England policy maker Gertjan Vlieghe.
With the benchmark rate at a record-low 0.25 percent and asset purchases “an imperfect substitute,” the BOE’s nine-member policy setting committee has less room to ease measures than to tighten.
He also warned that consumers — so far the powerhouse of economic growth — are starting to slow their spending and businesses could have a greater reaction to uncertainty as Britain moves closer to leaving the European Union.
BOE officials lowered the benchmark and expanded stimulus to bolster the economy in the wake of June’s Brexit vote, but since then the U.K. has proved more resilient than their forecasts.
“If I see signs that inflationary pressures are spreading beyond just exchange-rate pass-through, or I see a re- acceleration of indicators related to household spending and credit, that would be my cue that a slightly higher level of bank rate is warranted,” he said.