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Will the ECB and BoE follow Fed's rate rise approach?
With the European Central Bank decision imminent, two top UK economists share their thoughts on what to expect. No surprise perhaps if the ECB keeps interest rates steady and offers no further stimulus to the eurozone recovery, despite a fall in inflation.
David Kern, Senior Economist at the British Chamber of Commerce, says he thinks the legal position in the eurozone will make it “impossible to increase QE” but he adds there’s a “good chance they will ease”.
Rates have been a hot topic ever since the Federal Reserve’s Janet Yellen hinted that rates could rise in the US in six months time after ending its massive bond-buying programme. So does this mean the ECB or the Bank of England will consider taking the same approach?
Philip Booth, Director at the Institute of Economic Affairs and Professor at CASS Business School says that policy in the US “will to an extent” affect the UK but adds that countries with floating exchange rates can determine their own monetary policies, and that’s “what we should do”.
David Kern also adds he thinks the first increase of rates in the UK will take place in the third quarter of 2015, and commentators who call for higher rates are jumping the gun.
On Wednesday, IMF head Christine Lagarde said that "more monetary easing, including through unconventional measures, is needed in the euro area."
01:44 minutes
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