BoE's Saunders reiterates call for rate cut
Bank of England policymaker Michael Saunders reiterated his call for an interest rate cut on Wednesday as he said the UK economy has remained "sluggish".
In a speech in Northern Ireland, Saunders - who voted for a 25 basis points rate cut in both November and December last year - said business surveys were consistent with "little or no growth" in the 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," he said. "With limited monetary policy space, risk management considerations favour a relatively prompt and aggressive response to downside risks at present."
Saunders said that even if the economy improves slightly, risks for the next year or two are on the side of a more protracted period of sluggish growth than the Monetary Policy Report forecast.
"Those uncertainty gauges are still relatively high compared to the years just before the referendum, and there are grounds to be pessimistic on the two key inflexion points of faster global growth and reduced Brexit uncertainty," he said.
At 0920 GMT, sterling was down 0.1% against the dollar at 1.3013. On Monday, the currency fell sharply after BoE policymaker Gertjan Vlieghe suggested that he would vote for an interest rate cut this month.
In an interview with the Financial Times over the weekend, Vlieghe said he would vote for a rate cut later this month if key economic data don’t show a recovery in the economy after the December election.
"Personally I think it’s been a close call, therefore it doesn’t take much data to swing it one way or the other and the next few [MPC] meetings are absolutely live," he told the FT. "I really need to see an imminent and significant improvement in the UK data to justify waiting a little bit longer."