(Reuters) - The Bank of England will need to see more signs of price pressures building in Britain's economy before it raises interest rates from record low levels, its deputy governor Minouche Shafik said on Monday.
In an interview with the Financial Times, Shafik said she saw "no significant evidence" that price pressures were mounting and that slack remained in the labor market - her most explicit comments on monetary policy since her appointment in August.
Shafik's remarks came a day after her Monetary Policy Committee colleague Ian McCafferty said the BoE should start raising interest rates now because spare capacity in the economy was being used up so quickly.
Shafik dismissed surveys that point to future wage pressures in companies because they "haven't manifested themselves" in real data, the FT reported.
"We would need to see more of the data pointing in the same direction in terms of price pressures – particularly in terms of wages and unit labor costs (before raising interest rates)," said Shafik.
"In terms of sustained domestic inflationary pressures, that’s going to be the ultimate test," she added. Out of the MPC's nine members, only Martin Weale and Ian McCafferty have so far voted to raise interest rates from their record low level of 0.5 percent.
Minutes of the BoE's October policy meeting showed most MPC members were firmly against raising rates now, pointing to weak inflation pressure at home and a slowdown in the euro zone, Britain's most important export market.
Asked by the FT if she was nowhere near voting for a rate hike, Shafik said: "You might say that, but I couldn't possibly comment" - a catchphrase from 1990s British television drama "House of Cards" that signifies implicit agreement.
"I think unemployment has not reached the place where we can say all the slack has gone in the labor market," said Shafik.
In a separate speech on financial market reform on Monday, Shafik said tougher rules may be needed to stop a repeat of the "outrageous" behavior that has hit trust and confidence in financial markets in recent years.
reuters.com
In an interview with the Financial Times, Shafik said she saw "no significant evidence" that price pressures were mounting and that slack remained in the labor market - her most explicit comments on monetary policy since her appointment in August.
Shafik's remarks came a day after her Monetary Policy Committee colleague Ian McCafferty said the BoE should start raising interest rates now because spare capacity in the economy was being used up so quickly.
Shafik dismissed surveys that point to future wage pressures in companies because they "haven't manifested themselves" in real data, the FT reported.
"We would need to see more of the data pointing in the same direction in terms of price pressures – particularly in terms of wages and unit labor costs (before raising interest rates)," said Shafik.
"In terms of sustained domestic inflationary pressures, that’s going to be the ultimate test," she added. Out of the MPC's nine members, only Martin Weale and Ian McCafferty have so far voted to raise interest rates from their record low level of 0.5 percent.
Minutes of the BoE's October policy meeting showed most MPC members were firmly against raising rates now, pointing to weak inflation pressure at home and a slowdown in the euro zone, Britain's most important export market.
Asked by the FT if she was nowhere near voting for a rate hike, Shafik said: "You might say that, but I couldn't possibly comment" - a catchphrase from 1990s British television drama "House of Cards" that signifies implicit agreement.
"I think unemployment has not reached the place where we can say all the slack has gone in the labor market," said Shafik.
In a separate speech on financial market reform on Monday, Shafik said tougher rules may be needed to stop a repeat of the "outrageous" behavior that has hit trust and confidence in financial markets in recent years.
reuters.com
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