Bank of England policymaker says Brexit uncertainty weighed on interest rate vote


One of the Bank of England's newest policymakers has used his first speech to defend his dissenting vote against the most recent interest rate rise, adding that Brexit uncertainty still poses a significant risk to the UK's economic outlook.

Sir Dave Ramsden, deputy governor for markets and banking, was one of two Monetary Policy Committee (MPC) members who voted to keep rates at record lows of 0.25% earlier this month, amid fears over muted wage growth and doubts over the Bank's forecast for domestic inflation pressures to pick up.

"That was not because I disagree with the overall framework for setting monetary policy in this exceptional period, but rather because I have a somewhat different assessment of the economy," Sir Dave said in a speech prepared for the Strand Group Lecture Series at King's College London.

While the remaining seven members of the MPC moved to counter surging inflation with the first rate rise in a decade, Mr Ramsden said he was "willing to wait for more evidence on the evolution of wage and domestic cost growth before beginning to withdraw more monetary stimulus".

"So I voted for no change in Bank Rate," he explained.

While he admitted that it was difficult to come to a firm conclusion as to why the economy has behaved the way it has since the Brexit vote, Sir Dave said that uncertainty surrounding Britain's divorce from the EU could weigh heavily on the economy.

"The biggest risk I see to that outlook for demand is around the resolution of the current uncertainty about our eventual trading arrangements and the path that will be followed to reach them.

"Were that uncertainty to be lifted, I can see a case for why whole economic demand could grow more strongly, more in line with, for example, recent manufacturing indicators.

"Equally, were uncertainty to persist at current levels or even increase further, I could see a case for demand growth, and in particular investment growth, being weaker."