LONDON, Oct 16 (Reuters) - Bank of England policymaker Kristin Forbes said on Friday that she expected British interest rates to rise “sooner rather than later”, and that concern about a slowdown in China and other emerging markets was overdone.
Forbes said Britain’s economy had limited direct exposure to the problems seen so far in developing nations, even taking into account how they might hit key trading partners such as Germany. Domestically-led growth would continue, albeit more slowly.
“As a result, despite the ‘doom and gloom’ sentiment, the news on the international economy has not caused me to adjust my prior expectations that the next move in UK interest rates will be up and that it will occur sooner rather than later,” she said in a speech to business leaders in the English city of Brighton.
But Britain would not be immune if there was a sharper-than-expected slowdown in emerging economies or a “financial crisis of some type”, Forbes said.
After two years of strong economic growth in Britain, the BoE is considering when to raise its benchmark rate from a record-low of 0.5 percent. The Bank’s governor, Mark Carney, has said a decision will become clearer around the turn of the year.
Only one of the BoE’s nine rate-setters -- Ian McCafferty -- has voted to raise borrowing costs in recent months. Forbes is widely seen as one of the most likely candidates to join him and vote for a rate hike soon.
Most economists still expect the BoE to start to raise rates in the first quarter of next year, though a growing number think the central bank could take longer.
Forbes’s comments about the low risk of a significant impact on Britain from the slowdown in emerging markets contrast with the views of the newest member of the Monetary Policy Committee, Gertjan Vlieghe, who on Tuesday said he considered a slowdown in the global economy to be “a major risk” for Britain.
* For a text of Forbes's speech, see here (Reporting by William Schomberg, editing by David Milliken)