Economist underlines message on bank rates during visit
Interest rates "aren't rising yet" and when they do, will increase at a very gradual rate to allow the UK economy to recover fully, a member of the group which sets interest rates at the Bank of England has said.
Spencer Dale (above) said rates would hold at the historical low level of a half of one percent in the meantime while spare production capacity is absorbed by the economy, but wouldn't be drawn on when a rate hike is likely.
"At some points rates will rise," he told the Belfast Telegraph on a visit to Northern Ireland. "I don't know when but the key thing is when they do rise they are likely to rise gradually because we're very focused on making sure we support the recovery."
He said the 5% which UK interest rates averaged before the downturn in 2007 would no longer be a benchmark, at least in the medium term.
"We think because of the lasting effects of the financial crisis, interest rates will remain below that level for some time to come."
Money markets have been factoring in a rate hike for 2015, and the central banker said the UK general election, planned for May of that year, would have no effect on the banks decision-making process on rates.
Mr Dale is executive director and chief economist at the central bank and sits on the nine-person Monetary Policy Committee (MPC) which sets UK interest rates.
He was in Northern Ireland to visit businesses in north Down and to get a feel for the business environment here.
"The reason we're here is to listen and learn," he said. "The only thing I'm certain of when setting monetary policy is you can't do it sitting at your desk in London looking at the aggregate data. You've got to find out what's happening on the ground."
Mr Dale said he had visited three manufacturing businesses in the region, all of which were successful by focusing on increasing exports and by continuing to invest in their businesses.
He said the story he was hearing from those businesses was the same as for the rest of the UK in that the economy is beginning to recovery. Asked whether Northern Ireland is lagging behind the recovery across the other UK regions Mr Dale agreed, but said there were reasons to be optimistic.
"Perhaps Northern Ireland is a little behind, but the direction of travel is similar," he said. "And I must admit some of the businesses we've seen today are a success story."
Who is Spencer Dale?
Mr Dale is executive director and chief economist at the central bank and sits on the nine-person Monetary Policy Committee (MPC) which sets UK interest rates. His views on the economy across the UK are key to determining interest rates – the rate at which the central bank lends money. The MPC meets once a month and has kept rates at 0.5% for nearly four years.