Can the Economy Handle Another Hike By The Bank of England?
While GDP has kept pace at a buoyant 3.0 percent in the first quarter, the ultra-aggressive stance that the Bank of England has taken this year will surely make a dent on the economy. Estimates for second quarter expansion are for a mild slowdown to 2.9 percent, but since the effects of monetary policy tightening take time to filter through the economy, there are major downside risks to third quarter growth. According to Bank of England Deputy Governor Sir John Gieve, this isn’t exactly a problem for the central bank. On July 10th, he told the Nottingham Evening Post: “The issue for me is have we done enough to bring inflation back on a sustained level of two percent in the long term…There are some signs that the past interest rates may be coming through in consumption and housing, but it is not clear cut yet…If we saw a bit of a switch into stronger investment and exports and slightly weaker consumption, that would be no bad thing.” Clearly, the Bank of England is willing to take the