Bank of England policymakers must proceed cautiously – like mountaineers – as they cut interest rates in the months ahead as inflation risks rise, according to the central bank’s deputy governor, Dave Ramsden.
Dave Ramsden said gradual and careful approach needed to balance inflation risks and interest rate cuts.
In an address that repeatedly stressed the heightened uncertainty facing policymakers, Ramsden said he no longer believes the risks to the inflation outlook are to the downside.
Ramsden backed a quarter point interest rate cut in December, against the majority, fearing the jobs market was cooling rapidly and could lead inflation to undershoot.
But with the Bank now expecting inflation to rise to 3.7% later this year, and average weekly earnings growth to be 6.75% in the first quarter, much higher than previously forecast, he now believes the risks are balanced.
