​MNI POLICY: BOE's Haskel Would Back More Stimulus If Needed

Excess capacity in the UK economy is fueling downward price pressures, Bank of England Monetary Policy Committee member Jonathan Haskel said Monday, adding that he is ready to vote for increased stimulus when needed.

Speaking at a Barclays seminar, Haskel said research suggested negative rates had beneficial effects but that this likely depended on financial sector infrastructure and where things are in the economic cycle. The MPC has adopted a gradualist approach to negative rates, pre-announcing a fourth quarter consultation with banks and other interested parties and with its members stressing that the evidence is being carefully sifted.

MNI has previously reported that the questions for the Q4 consultation have yet to be finalised.

Work by the European Central Bank "strongly suggests… that negative rates have benefitted the economy, they have mostly been passed through to corporate depositors if not to retail depositors, effectively increasing lending and business investment.

"That said, the effectiveness is probably going to be contingent on the structure of the financial system and the position where we are in the cycle," Haskel added.

In the near-term he stressed that the risks were to downside for both growth and inflation but he pointed to the threat further ahead from a Covid shock, which is pushing up on firms' costs in sectors such as hospitality.

"The supply shock issues are yet to be thought through and the near term (growth and inflation) risks are skewed to the downside," Haskel concluded.