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Cost of late rate hike similar to premature one, says BoE's Saunders
April 21, 2017 / 12:59 PM / 5 months ago

Cost of late rate hike similar to premature one, says BoE's Saunders

LONDON, April 21 (Reuters) - Bank of England policymaker Michael Saunders said on Friday raising interest rates too late had similar costs to moving too early, distancing himself from colleagues who have previously stressed greater risks from a premature rate hike.

Saunders, speaking at a meeting of the Federation of Small Businesses in London, had said earlier that growth and inflation were likely to be higher than the BoE forecast, and that policy would remain stimulative even if the BoE raised rates slightly.

Some members of the BoE’s Monetary Policy Committee have said they would be wary about raising interest rates from their record-low 0.25 percent because of the lack of scope to cut rates by much if this damaged the economy.

But Saunders said being too slow to raise rates to tackle inflation could be just as bad.

“I‘m not sure that one is a bigger error than the other,” he said in a question and answer session. (Reporting by Andy Bruce, writing by David Milliken; editing by Michael Holden)

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