LONDON The highly uncertain outlook for Britain's economy as it prepares to leave the European Union means the Bank of England should keep interest rates on hold, a top Bank of England policymaker said on Monday.
Gertjan Vlieghe, one of the strongest advocates for Bank of England stimulus in the aftermath of June's Brexit vote, said upside or downside surprises in Britain's economy need not prompt automatic changes in British monetary policy.
But he warned "tension" between pessimism about Britain's economic prospects in financial markets, caution in businesses and relative optimism in households could not last.
"For now, given our current economic outlook, and given the level of the exchange rate..., the best contribution that monetary policy can make to returning inflation to target while avoiding undesirable volatility in output growth is to keep interest rates where they are now," Vlieghe said in a speech at Sheffield University.
Vlieghe also said Britain's economy had held up better in the second and third quarters of this year than he had feared, and that the uncertainty around Brexit had not so far prompted big changes in businesses' hiring and spending plans.
He said Britain was going through more of a "slow-motion slowdown".
Vlieghe also added his voice to the defence of low interest rate policies around the world, arguing that they are the symptoms of problems in the global economy rather than their cause.
(Reporting by William Schomberg, writing by Andy Bruce; Editing by Toby Chopra)