Economy on the right path, says MPC man

“On balance, I think the outlook is now looking more encouraging than for some time,” said Ian McCafferty, a member of the Bank of England’s Monetary Policy Committee (MPC).

He cited improving credit conditions, an expected gradual recovery in investment by businesses and encouraging signs from the economies of United States and China.

“Of course, there remain substantial risks that may still knock us off course, not least from the challenges facing the euro area, and if required, the MPC stands ready to respond,” McCafferty said.

Britain’s economy is expected to grow just 0.6 per cent this year, according to the Government’s budget watchdog, despite the Bank holding interest rates at a record low for four years and spending £375bn on government bonds in an attempt to get growth going again.

Mr McCafferty said that while the risks of higher inflation were more concerning, it was appropriate for the Bank to tolerate above-target price growth over the next two years.