Bank of England (BOE) Deputy Governor Charlie Bean said he was optimistic about Britain’s economy and would welcome being able to raise interest rates from record low levels, as it would show the economy was getting back to normal after the financial crisis.
Bean — who retires at the end of the month — said in an interview with the Sunday Times newspaper that was published late on Saturday that it would be unhealthy to keep rates low for too long.
“I would welcome us getting on to the path of normalization, as a demonstration that the economy is healing. Frankly, having interest rates at an emergency level for a very long time is not a situation one wants to be in,” he said.
Bank Governor Mark Carney surprised markets on Thursday when he said interest rates could increase sooner than they expected.
Most economists now expect rates to rise by March next year, and a significant minority think a rate hike could come before the end of this year.
Bean reiterated the bank’s view that rate rises would be gradual when they came, and was upbeat about the economic outlook for Britain.
“I am optimistic. This is a recovery that has legs. We are starting to see better balance, with investment picking up. Manufacturers we talk to are pretty positive. There are still risks but there are plenty of reasons to be cheerful,” he said.
Tomorrow, Bean and other members of the bank’s Financial Policy Committee (FPC) are to consider whether to take more steps to tackle risks posed by the housing market.
House prices have risen by more than 10 percent over the past year, but Bean said the situation was not out of control.
“I see what the FPC could do as insurance against problems that might build, rather than that we have already let the genie out of the bottle,” he said.
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