The ongoing sovereign debt crisis currently occurring in the Euro zone is more dangerous to personal and business bank account holders than the US slowdown, one Monetary Policy Committee member recently said.
Martin Weale, a member of the Bank of England’s MPC, recently spoke out on the economic outlook of the UK, commenting that EU financial woes can have a direct and deleterious affect on the country’s interest rates and inflation. Mr Weale pointed out the dangers that could potentially befall the UK economy due to the continued instability of European Union financial institutions.
The MPC member also stated that this economic instability was being made worse by the political uncertainty accompanying an EU resolution concerning the woes that have befallen the Euro as a currency. Mr Weale did see a silver lining, however, as the recent drop in the price of oil could help to curb inflation rates in the UK, which has persistently exceeded the 2 per cent target rate set by the Government for a substantial period of time and has led to the deterioration of savings account balances.
The Committee may consider supporting an increased number of asset purchases if inflation rates appear to be heading back down towards this 2 per cent target rate. However, Mr Weale added that the MPC currently has no plans to do so at this time because there was no demonstrated need.
The Bank Rate will most likely remain unchanged as well, said the Committee member. Mr Weale’s comments regarding the dangerous nature of the EU financial situation in regards to its negative impact on the UK economy were in line with the BoE’s latest Inflation Report, which once more decided to keep the base rate at its historically low 0.5 per cent rate.