Log in
Log in
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
Sign up
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexCryptocurrenciesCybersecurityPress Releases

BoE's Haskel sees tension with government fiscal expansion

09/22/2022 | 03:39pm EDT
FILE PHOTO: Professor Jonathan Haskel, who has just been appointed to the Monetary Policy Committee of the Bank of England, is seen in this undated portrait released by HM Treasury in London

LONDON (Reuters) -Bank of England policymaker Jonathan Haskel said the UK central bank was in a difficult position as the government's expansionary fiscal policy appeared to place it at odds with the BoE's efforts to cool inflation.

"We are in a difficult, uncomfortable position, frankly, because I don't like being in a situation where you have one institution - namely the independent central bank - at least being portrayed as set against another institution, the elected government," he said on Thursday.

"Having a fiscal expansion in the context of tight supply is, I'm afraid, very difficult," he added, during a panel discussion hosted by London's North Western Reform Synagogue.

Haskel is an external member of the BoE's Monetary Policy Committee, and one of three policymakers who voted to raise interest rates by three quarters of a percentage point to 2.5% this week, rather than the half-point rise favoured by the majority.

British inflation hit a 40-year high of 10.1% in July, and the BoE has raised rates by half a percentage point at two successive rate meetings, which were its largest rate rises since 1995.

Finance minister Kwasi Kwarteng is due to give more details of the government's economic plans in a fiscal statement on Friday. He is expected to confirm around 30 billion pounds ($34 billion) of permanent tax cuts and give details of energy subsidies for households and businesses that could cost over 100 billion pounds.

Earlier on Thursday, BoE Governor Andrew Bailey wrote in a letter to Kwarteng that the household energy cap would reduce inflation in the short term but could also create medium-term price pressures.

The BoE said it would give fuller consideration to the new government's policies in its November economic forecasts.

"Taking the government at their word, what they're hoping for is that the fiscal expansion will raise the feeble rate of growth and ... if we expand the supply side of the economy, that gets us ... out of the push and pull situation," Haskel said.

($1 = 0.8883 pounds)

(Reporting by David Milliken; Editing by Sachin Ravikumar and Catherine Evans)

By David Milliken


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) -0.03% 0.6013 Delayed Quote.10.00%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) -0.01% 0.67815 Delayed Quote.12.67%
EURO / BRITISH POUND (EUR/GBP) -0.07% 0.8927 Delayed Quote.3.96%
INDIAN RUPEE / BRITISH POUND (INR/GBP) 3.53% 0.011347 Delayed Quote.10.45%
US DOLLAR / BRITISH POUND (USD/GBP) -0.02% 0.921659 Delayed Quote.20.12%
Latest news "Economy & Forex"
07:42aUAE signs energy agreement with Germany's Scholz - state news agency
RE
07:33aBangladesh ferry accident kills 23, dozens missing
RE
07:25aVoting begins in Italy's early election
RE
07:23aIMF team heads to Ghana on Monday to discuss loan programme request
RE
07:15aRussia says Ukraine tried to attack Zaporizhzhia nuclear plant with 'kamikaze drones'
RE
07:09aSwiss on course to reject initiative to ban factory farming
RE
07:01aUK's Truss to review visa schemes to ease labour shortages - FT
RE
06:56aFamily, supporters demand justice in alleged murder of Indian woman
RE
06:54aExclusive-Italy and Intel pick Veneto as preferred region for new chip plant - sources
RE
06:31aLebanon's banks to reopen on Monday - statement
RE
Latest news "Economy & Forex"