BoE's Haskel threw a note of caution into the discussion over whether to raise interest rates in the United Kingdom.
Speaking at a resolution foundation event, Haskel stated that the economy is "firing on two cylinders" and that it is "too early to declare success" in re-engaging people on furlough.
While Haskel stated that he was not commenting on monetary policy, his statements underline the need for policymakers to hold off on boosting interest rates. On November 4th, the central bank stunned investors by maintaining borrowing prices steady but stated that rates will need to rise in the coming months to reduce inflation.
Haskel also remarked that the uncertainty surrounding Brexit contributed to a dip in company investment and that Britain's choice to leave the European Union may result in a permanent reduction in trade.
"Of course, Brexit and all of the agonies and so forth surrounding the Brexit process did not help in investment," Haskel remarked on Monday. "From an economic standpoint, everything of the uncertainties that led up to it, the succession of cliff edges around the withdrawal deal talks, were really awful for investment."
He remained optimistic that the government's assistance to people who lost their jobs as a result of the pandemic would preserve the economy in the long run. He cited numbers from the Resolution Foundation, which estimate that the great majority of furloughed staff have returned to work. That "suggests that thus far, the massive fiscal support provided to firms has maintained employees' earnings, has defended enterprises' balance sheets, and has not resulted in the economy completely collapsing," he said. "Of course, we have to figure out how to stitch the economy back together after the pandemic."
Haskel was encouraged by indicators that intangible investment has remained high, which he believes will be a "spring of vitality" in the future.
