Early interest rate rise could 'stamp out recovery'

Early interest rate rise could 'stamp out recovery'


Retiring Monetary Policy Committee (MPC) member, David Blanchflower, has warned that if the Bank of England increases interest rates too hastily, economic recovery could be affected.

According to the Telegraph newspaper, Prof Blanchflower said: "What I'm most worried about is that the moment we start to see a recovery, the MPC stamps all over it and destroys it."

The base rate has been slashed to a record low of 0.5 per cent since late last year, but in recent weeks the Bank of England governor, Mervyn King has spoken about tightening monetary policy and a possible exit strategy from quantitative easing.

However, Prof Blanchflower, who will step down next month, has said that it is too soon to discuss exit strategies, adding: "I am concerned that the people who got it wrong on the way down will get it wrong on the way out, maybe even for the same reasons."  

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