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Ben Broadbent: UK better placed for rate rise

UK interest rates may have to go up by more than the market expects in the future, the Bank of England's deputy governor, Ben Broadbent, has told the BBC.

The Bank voted 6-2 to keep interest rates on hold at 0.25%, a level they have been at since August last year.

Pockets of debt

The Bank expects the rate of inflation to peak at about 3% in October,

Mr Broadbent said the Bank's Monetary Policy Committee (MPC) believed there would need to be more rate rises than those expected by the financial markets. He thought "the time is likely to come when rates will go up generally".

However, he added: "One shouldn't overdo this. If and when it happens there will be a lot of talk about the first rate rise since 'x'. But it's just a rate rise and we got perfectly used to rate rises of this size in the past."

He said the objective of the MPC was not "the path of interest rates but the stability of inflation in the medium term and subject to that the stability of the economy".

The Bank is concerned that uncertainties about Brexit appear to be putting companies off new investment, despite an increase in profits for exporters following the fall in the value of the pound since last year's referendum.

He also said the Bank's monetary policy makers were not too concerned about the debts of British households because consumer credit, relative to incomes, remained much lower than its level before the financial crisis.

"It is absolutely right that the prudential side of the Bank ... should be concerned about pockets of debt that are growing very, very quickly.

"The MPC does not think this is a first-order macro issue for the economy."