THE Bank of England’s chief economist has signalled he will likely vote to raise interest rates “relatively soon”, with the

“dust-cloud” of uncertainty from the General Election among factors preventing him from doing so last week.

Andy Haldane’s comments, published yesterday, wrongfooted financial markets because he had been viewed as one of the dovish members of the Bank’s Monetary Policy Committee (MPC). His signal pushed sterling higher as financial markets saw an increased chance of a near-term rise in UK base rates from their record low of 0.25 per cent.

Mr Haldane’s tone contrasted with that of Bank Governor Mark Carney on Tuesday. Mr Carney, highlighting “anaemic” wage growth, said from his perspective “now is not yet the time” to begin raising UK base rates.

The MPC last week voted five-to-three to hold base rates, with Ian McCafferty, Michael

Saunders and Kristin Forbes, who is stepping down, pushing in vain for a quarter-point rise.

Mr Haldane also contemplated the reasons for continued

“surprisingly” weak pay growth in the UK against the backdrop of a sharp rise in employment.

He cited a tumble in trade union membership and collective pay bargaining, and increases in self-employment and part-time and temporary working as key factors in this weakness, also noting the impact of technological advances and globalisation.

Mr Haldane said: “One story here is ‘divide and conquer’. There is power in numbers. A workforce that is more easily divided than in the past may find itself more easily conquered.”

He cited weak wage growth and the expected drag on activity from Brexit as factors supporting the case for holding rates.

But he voiced his belief that, over the last six to nine months, “the balance of risks associated with tightening monetary policy ‘too early’, on the one hand, and ‘too late’, on the other, has swung materially towards the latter”.

He added: “The risks of tightening ‘too early’ have shrunk as growth and, to lesser extent, inflation have shown greater resilience than expected. And if policy tightened ‘too late’, this could result in a much steeper path of rate rises later on, contrary to the MPC’s collective expectation that Bank Rate would increase ‘at a gradual pace and to a limited extent’...

“Provided the data are still on track, I do think that beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second half of the year.”

The MPC cut rates by a quarter-

point last August.

Mr Haldane revealed he had “considered the case for a rate rise at the MPC’s June meeting”, but cited “few signs of higher wage growth” on the back of the inflation rise and “some chance of a sharper-than-expected slowing in the economy” as reasons for holding back.

Citing the General Election that resulted in a hung Parliament, he added: “This [election] has thrown up a dust-cloud of uncertainty. Financial markets-wise, that is manifesting itself in a weaker exchange rate.

“It is unclear what twists and turns lie ahead, with potentially important implications for asset prices and, at least potentially, confidence among businesses and consumers. I do not think adding a twist or a turn from monetary policy would, in this environment, be especially helpful in building confidence, at least until the dust-cloud has started to settle.”