LONDON (Reuters) - Bank of England Deputy Governor Dave Ramsden said on Thursday that recent data supported the central bank’s view that the sharp slowdown of growth in Britain’s economy in a wintry start to 2018 would prove temporary.
Ramsden said it was still “early days” but “the data we have had so far suggests our interpretation of the slowdown in Q1 as temporary looks to be being borne out.”
In the text of a speech he was due to give in London, Ramsden pointed to a pickup in consumer confidence and credit and to a rebound in retail sales and business surveys, including a stronger-than-expected reading of the service sector in May.
“So far at least our May judgment looks on track,” he said.
The BoE’s Monetary Policy Committee’s members voted 7-2 in May to keep rates on hold while they waited to be sure that the near-stagnation of Britain’s economy in the first quarter, when the country was hit by heavy snow, was only temporary.
Ramsden said in his speech to a conference organized by Barclays bank that while he expected the economy to resume growing at a “steady but unspectacular pace,” even that would be enough to raise the risk of an overheating because of weak productivity growth, echoing the BoE’s central view.
He said he also backed the MPC’s view that an ongoing tightening of monetary policy would be appropriate if the economy behaved as the committee expected.
Ramsden said the period of usually weak growth in wages appeared to be coming to an end.
Looking further ahead, Ramsden said he was optimistic that technology in financial services and beyond could boost productivity and help the economy grow more quickly without generating excess inflation.
Writing by William Schomberg; Editing by Alistair Smout