The uncertainty from “Brexit” suggests waiting for firmer evidence before taking any action, Bank of England policymaker Martin Weale said Monday.
“This uncertainty points to the argument that we should wait for firmer evidence before making any policy change and least in the absence of any strong arguments for an immediate change,” Weale said in his final speech as a member of the monetary policy committee.
Nonetheless, the short-term impact on demand will be more severe than that on supply, dampening inflation, he said.
At the July meeting, the BoE refrained from cutting interest rate, while markets widely waited for monetary policy easing.
Weale today rejected the argument that markets would be disappointed were there to be no easing in August, The bank “is not a nurse to markets.” He reminded that the MPC sets policy each month, not in advance.
The banker gives little weight to the argument that early action is needed to reassure people, noting there was no sign consumers or businesses were “panic-struck.”
“For there to be a case for easing policy I will need to expect weakness in output to be large enough more than to compensate for any overshoot in inflation on the assumption that policy is unchanged in the near term,” Weale said.