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Interest rates could be cut warns BoE chief economist

The Bank of England’s chief economist has warned that the cost of mortgages, interest rates, looks set to fall after evidence that the global financial crisis is entering its third phase.

Andy Haldane cited evidence of a slowdown on the domestic front and risks to the global economy from China, where an economic downturn has coincided with a stock market rout that has sent shockwaves through the world’s markets. Recent indicators in the UK have shown growth slowing and unemployment rising slightly – see and


His view that the Bank may need to resort to even more unconventional moves to protect the UK recovery puts Haldane at odds with the Bank’s governor, Mark Carney, who has indicated that interest rates may rise from 0.5% early next year.

The suggestion that rates should stay low for longer will be welcomed by homeowners with tracker mortgages but is a blow to savers who have been hoping to finally see higher returns on their money.

Speaking on interest rates

Haldane, one of nine policymakers who set interest rates, was speaking a day after the US central bank decided to delay an interest rate hike for the world’s biggest economy. The US rate-setters blamed a more fragile global outlook in remarks that further rattled jittery financial markets.

In a wide-ranging speech that called on central bankers to think more radically to fend off the next downturn – including the notion of abolishing cash – Haldane warned the UK was not ready for higher borrowing costs.

“In my view, the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside,” he said. “Against that backdrop, the case for raising UK rates in the current environment is, for me, some way from being made.”

Further reading:

UK interest rates may have to be cut, warns Bank of England chief economist

Bank of England’s chief economist warns UK may now have to CUT interest rates

Interest rates could be cut – BoE chief economist

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