BoE chief economist Andy Haldane said that his vote for rate hike last week was “hardly either surprising or radical”. He pointed out it was a “a full decade after monetary policy was first placed on an emergency setting”. Even with a 25bps hike in the Bank Rate to 0.75%, monetary conditions in the UK would remain ” extraordinarily accommodative by any historical metric”. And the aim for a hike was to “lower the risk of needing to tighten policy less gradually in future and cause a sharper adjustment in the economy.” He also noted he would even have voted for a hike back in May “had data on the economy held firm”.
On the economy, he said “data on the consumer since the May MPC meeting has, virtually without exception, bounced back strongly”. And that includes “measures of retail spending, consumer confidence and consumer credit”. The underlying picture now appears to be one of “gently rising household spending”. This is being supported by highly accommodative credit conditions and “now-positive growth in inflation-adjusted wages”.
In addition, Haldane also said that there may could still be data disappointments. But he added that “waiting for something to turn up is not a prudent strategy in life. And waiting for everything to turn up is certainly not a prudent strategy for monetary policy.”
Overall pretty hawkish.