BANGOR: Bank of England interest-rate setter Michael Saunders said on Wednesday he was sticking to his view that borrowing costs should be cut because of weakness in Britain’s labour market and its broader economy.
“It probably will be appropriate to maintain an expansionary monetary policy stance and possibly to cut rates further, in order to reduce risks of a sustained undershoot of the 2% inflation target,“ Saunders said in a speech.
“With limited monetary policy space, risk management considerations favour a relatively prompt and aggressive response to downside risks at present.”
Saunders was one of two of the nine members of the BoE’s Monetary Policy Committee who voted to cut interest rates in late 2019.
Since then, other MPC members have said a rate cut might be necessary, including BoE Governor Mark Carney.
Saunders said some recent business surveys suggested Britain’s economy had improved while others had worsened than remained sluggish.
“But, taken as a whole ... business surveys are generally soft and consistent with little or no growth in the economy.”
Saunders also sounded a note of caution for the medium term.
“My own view is that, even if the economy improves slightly from the recent pace, risks for the next year or two are on the side of a more protracted period of sluggish growth than the MPR (Monetary Policy Report) forecast,“ he said. -Reuters