Inflation report - PwC's senior economic adviser comments

Published at 15:25 PM on 12 February 2014

In response to the Bank of England's latest Inflation Report out today, Andrew Sentance, senior economic adviser, PwC, said:

"The Bank's latest Inflation Report shows that the UK economy is growing well, unemployment is falling sharply and spare capacity is quite low - at just 1-1.5% of GDP. Despite this, the MPC clearly appears reluctant to raise interest rates. This policy carries the danger that when interest rates do rise, they will do so quite sharply.

"The latest revised forward guidance from the MPC has become even more complex and provides little clarity on the key issue of how the Committee will manage the process of raising interest rates. If the economy continues to grow and unemployment is still falling, the emergency monetary policies put in place five years ago will become increasingly inappropriate. So if the Committee wishes to see a gradual rise in interest rates, it needs to start sooner rather than later.

"The emphasis of forward guidance should therefore shift from trying to postpone a rise in interest rates to managing the process gradually in a way that does not jeopardise the recovery."

Ends

 

Gill Carson
PwC | Media Relations Manager
Office: 020 7212 1391 | Mobile: 07837 285466
Email: [email protected]
PricewaterhouseCoopers LLP
twitter: @gill_carson
http://www.pwc.com/

 

 


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