SHEFFIELD: Bank of England policymaker Gertjan Vlieghe said on Monday he still believed it was better to act with more caution about tightening monetary policy than keeping interest rates at very low levels.
"We can tighten as much as we want but we can only ease a little bit further and, at least for me, that's an important consideration when thinking about how to set monetary policy in the future," he said after giving a speech.
"If you get it wrong, and say you tighten and it turns out it was premature and it wasn't necessary yet, you have very little ammunition to undo the damaging effect of your mistake, whereas if you get it wrong the other way...you still have ample space and time to catch up by just putting interest rates up a little faster thereafter," he said.
"That asymmetry, at least for me, continues to play an important role," Vlieghe said.
The BoE this month said it adopting a neutral stance on interest rates, having previously said it expected to cut them further to help the British economy cope with the impact of the vote to leave the European Union.
Comments
Comments are closed.