We already knew she was a dove, but Bank of England Deputy governor, Rachel Lomax, has been cooing so loud this time that one can’t help the suspicion she was speaking up for more than just herself.
Ms Lomax was one of two Bank of England Monetary Policy members to vote against the rise in the rate of interest earlier this month, and yesterday she spoke out, saying: “There are still no real signs of pressure in the labour market.” Speaking at the CBI conference in Cardiff she added: “Taking out insurance against risks that don’t materialize can inject unnecessary volatility into the economy, with consequences for jobs as well as demand.”
The Bank of England dove explained her decision to vote for a rise in August by saying that at the time she thought there was a “quite significant” risk that wages would rise, and that back in the heady days of the summer the Bank thought there was a 50-50 chance inflation would exceed three percent. “Since August, the short and medium-term outlook for inflation have both improved somewhat,” she said, “as oil prices have fallen back very sharply and sterling has risen.”
Ms Lomax also said: “the faster growing labour force potentially raises the amount the economy can produce…Rather like raising the economy’s speed limit, it implies that it can grow faster without hitting supply constraints and generating inflationary pressure. That may be the situation right now.”
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