Skip to main content

Chief economist reports Bank of England may have to cut rates

28 Sep 2015

The Bank of England may cut interest rates to tackle low inflation instead of raising them, its chief economist Andy Haldane has said.

The prediction comes as a result of the gloomier outlook for the global economy, as reported by the economic forecaster the Centre for Economics and Business Research (CEBR).

UK inflation is at risk of not picking up over the second half of the year, with risks of fallouts from emerging economies becoming prevalent.

Weakening employment figures and poor surveys on manufacturing and construction output have indicated that growth in the UK could slow considerably, meaning inflation might not pick up as expected.

The CEBR believes that a rise in May or August 2016 is more likely than one predicted in February.

The Centre has warned that the UK’s performance may not be sustainable if economies elsewhere continue to struggle.

Indications of a global economic slowdown have been steadily growing in recent weeks, especially within the world’s second largest economy, China.

Haldane has described recent events in Greece and China as ‘the latest leg of what might be called a three-part crisis trilogy.’

‘The balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside,’ Mr Haldane said.