LONDON (Reuters) - A Bank of England policymaker said on Tuesday she thought the outlook for the global economy might not be as weak as some of her colleagues believe and could be less of a drag on Britain’s recovery than the bank has forecast.
Kristin Forbes is among seven members of the nine-strong Monetary Policy Committee who have voted in recent months to keep interest rates at crisis-era lows, although signs of differences between them emerged in BOE minutes last week.
A former White House economic adviser, she joined the British central bank in July.
Forbes told lawmakers in Britain’s parliament that some recent international economic data had been stronger, potentially easing a drag on the domestic economy, which has outperformed most developed country peers this year.
“Where my view is slightly different than probably the median view of the nine of us on the Committee is that I put slightly more probability on the risk that the global economy could be somewhat stronger than in our baseline forecast, especially the U.S. economy,” Forbes said.
She also said recent data on earnings suggested the weak pace of wage growth might have “turned a corner” but added there were many risks that Britain’s economy could perform more weakly or more strongly than forecast.
BoE Governor Mark Carney, speaking at the same session of parliament’s Treasury Committee, said the global economic outlook had deteriorated and geopolitical risks had increased.
The Bank’s rate-setters have voted 7-2 since August in favour of keeping rates at their record low of 0.5 percent.
But minutes of their last policy meeting showed there was a “material spread of views” within the majority, surprising some investors who nonetheless expect a first rate hike only deep into 2015.
Another member of the Monetary Policy Committee who has voted against a rate hike, Jon Cunliffe, said on Tuesday he was mostly worried about the risk of Britain’s inflation rate falling further from a nearly five-year low in October.
“With interest rates already at their effective lower bound and inflation below target, I am more worried about risk of inflation surprising again on the downside than that of an unexpected emergence of inflationary pressure,” he said in an annual report to parliament’s Treasury Committee.
Ian McCafferty, one of the two MPC members who have voted for a rate hike since August, stuck to his view that inflation pressures could build as the economy grows.
Additional reporting by Li-mei Hoang, Writing by William Schomberg; Editing by Catherine Evans