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BoE Weale says rate hike unlikely in the near future

Monday, Dec 21 2015
One of the Bank of England's most hawkish policymakers has signalled that he is unlikely to vote for higher interest rates in the near future. Martin Weale said a surprise "pause in wage growth" and further falls in commodity prices made the need for tighter policy "slightly less immediate".
 
"The factors pushing down on inflation have become a bit more prolonged," he said in an interview with the Telegraph. Mr Weale said the Monetary Policy Committee (MPC) that sets interest rates had more "breathing space" to assess how these factors would affect inflation, as he noted that there had been "very little wage growth" over the past six months.
 
"I initially thought that the weak wage growth was a wobble that represented stray numbers that you get once or twice from time to time. There has plainly been something more to it than that," he said.
 
Mr Weale said there was evidence to suggest that the full impact of interest rate rises could feed through to the economy "a little bit earlier" than the 18-24 month horizon suggested by economists, which also supported the case for keeping rates on hold a bit longer. "It's just another of the things that makes the need [to raise interest rates] slightly less immediate," he said. 
 
Sterling is currently being traded around 1.49 handle. Pair is likely to find support around 1.4850 handle and resistance above 1.4950 level. There will be no major data releases in the rest of the session.
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