Britain 'does not need to raise interest rates', claims senior bank of England official
Britain does not need to raise interest rates just yet as the dramatic fall in the oil price weighs down on inflation, according to a senior Bank of England official.
In a speech in Parliament today, Kristin Forbes will argue that the collapse in the price of crude gives the central bank 'the luxury of a bit more time' before raising rates.
She will say she wants to be more confident that wage growth will start to strengthen before pulling the trigger in what was seen as a clear sign she is in no rush to vote for a rate hike.
Crude talk: Senior Bank of England official Kristin Forbes says there is no need to raise interest rates just yet as the dramatic fall in the oil price weighs down on inflation
'The most recent falls in oil prices, by delaying the recovery in inflation, provide the luxury of a bit more time to build this confidence,' Forbes will tell Parliament.
The American academic, a member of the nine-strong monetary policy committee that sets rates in the UK, will add: 'With slow wage growth, inflation currently at 0.2 per cent, and downward price pressure from cheaper energy, there appears to be little risk of inflation suddenly spiking to well above our 2 per cent target in a way that would require increasing interest rates soon.'
Forbes will also say that when rates do increase the process is likely to be 'slow and gradual'.
The comments come a week after Governor Mark Carney described the global financial backdrop as 'unforgiving' as he insisted that 'now is not yet the time' to raise interest rates in the UK.
It is now thought there will be no rate hike until late this year or even next year in a blow to savers but a boost to borrowers worried about more expensive mortgage bills.
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