BoE’s Ben Broadbent Justifies Rate Hike

Bank-of-EnglandBen Broadbent who is one of the Bank of England's Monetary Policy Committee members gave a vehement reply to the critics over central bank decision regarding hike in interest rates.

According to him, the central bank's decision to tie interest rates hike is linked to employment rates.

Ben Broadbent, in a speech, at a London Business School event said that the uncertainty surrounding the Britain's economic recovery only strengthens the Bank of England's strategy of forward guidance.

Broadbent also claimed that the economy is growing and it is very hard to say or analyze how fast it is growing.

He said that forecasters generally anticipate only around a third of changes in economic growth one year ahead, and they can be no more confident that the recovery can continue smoothly at this rate than in the view that it would never arrive.

Broadbent repeated Bank of England Governor Mark Carney's message that it was very important not to raise or hike interest rates too early as otherwise it could damage the UK's fragile economic growth.

In August this year, Carney, made a landmark moment in British monetary policy history after delivering explicit forward guidance that the key interest rate will stay at its record-low of 0.5% until the UK unemployment rate falls below 7%.