BOE's Saunders Says Brexit Risks Don't Justify Low Rate
- Says modest interest rate increase needed to contain inflation
- Policy maker voted for hike at last two MPC meetings
This article is for subscribers only.
The risks related to Britain’s exit from the European Union aren’t reason enough to hold off raising interest rates, according to Bank of England policy dissenter Michael Saunders.
While Brexit could weaken sentiment, lower inward migration, limit labor supply and further impact the pound, the necessary monetary policy response is not clear, he said in a speech in Cardiff, Wales on Thursday. Meanwhile, the trade-off between above-target inflation and below-potential output is now “beyond my limits of tolerance,” he said, explaining his decision to vote for a rate increase at the BOE’s last two meetings.