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UPDATE 1-Bank of England's McCafferty "cautiously optimistic"
April 29, 2013 / 8:16 AM / in 5 years

UPDATE 1-Bank of England's McCafferty "cautiously optimistic"

LONDON, April 29 (Reuters) - Bank of England policymaker Ian McCafferty said he was “cautiously optimistic” about Britain’s economy in a newspaper column on Monday, although he added that recovery would continue to be difficult.

Britain’s economy last week reported stronger growth than most economists expected, expanding by 0.3 percent in the first three months of the year and dodging a return to recession.

McCafferty - who has not supported a resumption of the central bank’s quantitative easing asset purchase programme - said he believed official data had understated the true strength of the economy for some time.

“I see grounds for hope. Some of the forces that have held back recovery are easing. Supportive policies from the Bank of England are having an effect. Confidence is creeping up,” he wrote in an opinion piece for the Daily Mail newspaper.

McCafferty’s comments are broadly similar to those he made in a speech last week before the release of economic output data and the Bank of England’s announcement that it would extend a scheme to boost bank lending.

The BoE’s Monetary Policy Committee, on which McCafferty serves, will meet next week to consider a quarterly economic forecast update and whether to restart asset purchases.

McCafferty did not directly discuss his view on this, but said that after speaking to businesses in recent months, he was “struck by the improvement in their confidence” due to perceptions that the euro zone crisis is easing.

Excluding the oil and gas sector, Britain’s economy grew by 1.2 percent last year, he said.

“I do not wish to sound complacent - that still implies a slow and difficult recovery - but it is far from the doom and gloom reports of a semi-permanent recession,” he said.

Inflation is currently above the central bank’s target at 2.8 percent, but McCafferty said he believed that domestic inflation pressures remained “very subdued”.

* To read the full column, go to

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