UK 'can grow more' before rate rise

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Speculation over interest rate rise

The UK economy can "grow a little further" before the interest rate may need to rise but the decision is "becoming more balanced" a member of the Bank of England's Monetary Policy Committee said.

The panel agreed last week to leave the Bank rate at 0.5%, where it has been for five years, despite rumblings that some members are edging closer to voting for a hike.

Ian McCafferty, taking part in a phone-in on LBC Radio, denied that one member of the MPC was recommending a rise each month but agreed that time was approaching when it might be appropriate.

"Not according to my understanding," he said asked whether there were consistent calls for a rise.

"The time when it becomes appropriate for interest in the UK to start to rise back to a more normal level is approaching.

"But we've also said one, that we think there is scope for the economy to grow a little further before we really get to that point and secondly once we get to that point and thereafter than any rises in interest rates that we anticipate we hope will be only gradual for quite some time to come.

"What we have said, what we said in the last minutes that were published was that the decisions were becoming more balanced.

"I think a year ago, with the economy flat on its back it's a very easy decision to make as to quite what the appropriate level of interest rates is.

"After a year of relatively strong growth in which we have seen a sharp fall in unemployment and some very modest improvement now in nominal pay scales although that's still very modest.

"Then you have to say that the decision becomes more balanced. But as I said before I think the view amongst the committee is that given the depth of the recession and the loss of GDP that we faced over the course of the crisis and the ensuing recession we can still see the economy running a little bit longer."

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