(Bloomberg) --
The Bank of England's limited firepower means an immediate cut in interest rates is needed to lift inflation, according to policy maker Jonathan Haskel.
Haskel is one of two BOE policy makers who are pushing for lower borrowing costs. His focus on depleted monetary policy space echoes that of Michael Saunders, who's also voted for loosening in recent months.
Haskel said that a shift toward intangible investment -- a key theme of his academic research -- has made borrowing more difficult and costly on average, which will “have reduced the demand for investment at a given safe interest rate and ultimately pushed down on the equilibrium interest rate.”
“This much discussed low interest rate environment we find ourselves in, reinforced by the trend towards intangible assets that I have discussed today, in part informs my recent votes on the MPC,” he said in a speech in Nottingham Tuesday. “Limited conventional monetary policy space means I continue to prefer to move now.”
The BOE voted to keep its benchmark interest rate at 0.75% late last month. Seven of nine officials voted for no change, though two had indicated they may be close to shifting their views depending on the economy's performance.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien, Alaa Shahine
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