Bank Of England's Cunliffe Says Not Right Time To Raise Rates

Bank of England Deputy Governor Jon Cunliffe said Wednesday that this is not the right time to adjust interest rates, a stance in accordance with the views of Governor Mark Carney, but different from the bank's chief economist Andrew Haldane.

In an interview with BBC Radio, Cunliffe said he would wish to see how inflation evolves, adding that inflation above the 2 percent target is "not a comfortable place" for any member of the monetary policy committee.

For Cunliffe, it was important to consider how much of the overshoot was generated domestically, and how much caused by the fall in the sterling exchange rate.

UK inflation accelerated to a four-year high of 2.9 percent in May. The central bank has forecast 2.7 percent inflation for this year.

Further, Cunliffe said he wanted to see whether business investment and exports could compensate for a consumer slowdown.

Consumer spending is slowing as households' real income are squeezed by higher inflation.

"We do have to look at what's happening with domestic inflation pressures and on the data we have at the moment, gives us a bit of time to see how this evolves," he added.

Last week, fellow policymaker Haldane signaled favor for a rate hike. His comment came after Carney said the time is not right to begin raising interest rates as wage growth remains anaemic.

At the June meeting, the MPC voted 5-3 to keep the record low interest rate unchanged.

Kristin Forbes, Ian McCafferty and Michael Saunders sought a quarter point rate hike at the June meeting. They said partial withdrawal of stimulus will help to moderate inflation overshoot.