Bank of England’s Weale shifts stance after weak UK data

Bank of England policymaker Martin Weale said he saw the economic outlook differently after much weaker-than-expected British purchasing managers’ data, a week after saying he needed firmer evidence before backing an interest rate cut.

Weale, speaking to the Financial Times, did not state explicitly if he would back a rate cut when the central bank announces its next policy decision on Aug. 4, after it meets for a second time since Britain voted to leave the European Union.

But he did say that Friday’s purchasing managers’ data for the services and manufacturing sectors – which pointed to the sharpest contraction since the 2008-09 financial crisis – were “a lot worse than I had thought”.

“I see things rather differently from what I would have done had we not had those numbers and the material point is that they were collected after July 12, so after the initial shock of the referendum,” he said in the interview published on Tuesday.

“What I said last week is that I would like more information as well as more reflection and I have had more information. Although you can’t say there’s a clear signal, if you spend all the time waiting for a clear signal, it never comes,” he added.

The BoE surprised markets in July by not cutting rates for the first time since 2009, but minutes of the decision did show that most policymakers expected to back an unspecified package of measures to boost the economy in August.

However, Weale said last week that for him the case of looser policy was not clear, and that the central bank should not be driven by market jitters.

Weale has served for six years on the BoE’s Monetary Policy Committee and will step down after next week’s decision.

The FT reported him as saying Mark Carney’s arrival as governor in 2013 had brought greater discussion of financial markets, which Weale was unsure was good.

It was unclear “whether there are strong material signals from short term moves in financial markets versus the alternative view there’s always something to talk about because (financial markets) are always doing something”, Weale was quoted as saying.

Source: Reuters