The Bank of England's chief economist has warned of further cuts to the UK's interest rates over ‘another' financial crisis.
Interest rates in the UK may have to be cut further from their record low level as Andy Haldane highlighted signs that the global financial crisis is entering a third phase of turmoil, a Guardian report says.
Haldane cited evidence of a slowdown on the domestic front and risks to the global economy from China, where an economic downturn has coincided with a stock market rout that has sent shockwaves through the world's markets.
This is while, the bank's governor, Mark Carney, has indicated that rates may rise from 0.5% early next year.
Now Chris Bambery, political analyst in London, says the latest remarks by UK bank official shows the fragile state of banks in the UK, the US and Europe.
Haldane, one of nine policymakers who set interest rates, was speaking a day after the US central bank decided to delay an interest rate hike for the world's biggest economy. The US rate-setters blamed a more fragile global outlook in remarks that further rattled jittery financial markets. The FTSE 100 fell more than 1% in the wake of the US decision.
In a wide-ranging speech that called on central bankers to think more radically to fend off the next downturn - including the notion of abolishing cash - Haldane warned the UK was not ready for higher borrowing costs, the report added.
The suggestion of cutting rates closer to zero, or even moving to negative interest rates for the first time in the Bank's history, adds fuel to the debate over where monetary policy goes next after more than six years of record low borrowing costs.