THE Bank of England should avoid an early rise in interest rates from historic lows, and should be as prepared to cut as hike them in future, its chief economist said yesterday.
Andy Haldane said that recent strong wage data had not altered his view from earlier in the year about the dangers of moving too soon on monetary tightening.
He added that a drag on economic growth from the continued strength of the pound could outweigh the gains from higher wages. Haldane also warned that Britain and other major economies were suffering from “lasting and durable” psychological scars from the recent recession, which could hold back growth and keep rates – at 0.5 per cent for the past six years – lower for longer.
“A policy of early lift-off could be self-defeating,” he said.
“Looking ahead, I have no bias on either the size or the direction of future interest rate moves.”
Haldane’s comments came in an advance copy of a lecture he plans to give today.