BOE's Broadbent Cites Cloudy Economic Outlook in Arguing Against Rate Hike

Bank of England Deputy Gov. Ben Broadbent said he isn't yet ready to vote for a rise in the key interest rate, citing the many uncertainties that surround the outlook for the economy.

In an interview with Scotland's The Press and Journal conducted Tuesday and published Wednesday, Mr. Broadbent said businesses appeared uncertain about their prospects ahead of the U.K.'s departure from the European Union, though growth had been "okay."

"In my opinion, it is a bit tricky at the moment to make a decision (to raise rates)," he said. "I am not ready to do it yet."

The BOE's Monetary Policy Committee lowered its key interest rate to a record low of 0.25% in August 2016, responding to the June vote to leave the EU.

The pound's depreciation in the wake of that poll has raised import prices and spurred inflation. A number of MPC members are considering whether the moment is right to increase the central bank's key rate.

Three of the eight members voted for such a move at the MPC's June meeting, and BOE Chief Economist Andrew Haldane said in a subsequent speech that he might join that group soon.

BOE Gov. Mark Carney has also signaled that a rate rise may be on the way, while stressing that would depend on whether whether business investment grows sufficiently to offset a slowdown in consumer spending.

Mr. Broadbent also said the "mood of business" is a key factor in his thinking, but added it was "very difficult for us on the committee to judge" whether confidence was improving.

"There is reason to see the committee moving in that direction (higher interest rates) - but there are still a lot of imponderables," he said.

-Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

July 12, 2017 03:25 ET (07:25 GMT)