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Best for UK economy to keep rates on hold, says BoE's Vlieghe

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LONDON Nov 28 The highly uncertain outlook for
Britain’s economy as it prepares to leave the European Union
means the Bank of England should keep interest rates on hold, a
top Bank of England policymaker said on Monday.

Gertjan Vlieghe, one of the strongest advocates for Bank of
England stimulus in the aftermath of June’s Brexit vote, said
upside or downside surprises in Britain’s economy need not
prompt automatic changes in British monetary policy.

But he warned “tension” between pessimism about Britain’s
economic prospects in financial markets, caution in businesses
and relative optimism in households could not last.

“For now, given our current economic outlook, and given the
level of the exchange rate…, the best contribution that
monetary policy can make to returning inflation to target while
avoiding undesirable volatility in output growth is to keep
interest rates where they are now,” Vlieghe said in a speech at
Sheffield University.

Vlieghe also said Britain’s economy had held up better in
the second and third quarters of this year than he had feared,
and that the uncertainty around Brexit had not so far prompted
big changes in businesses’ hiring and spending plans.

He said Britain was going through more of a “slow-motion
slowdown”.

Vlieghe also added his voice to the defence of low interest
rate policies around the world, arguing that they are the
symptoms of problems in the global economy…



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