BoE's Shafik: Increase in household debt the greatest risk for UK stability

By FXstreet.com | Updated July 30, 2014 AAA

FXStreet (Łódź) - During her testimony before UK lawmakers, incoming BoE deputy governor Nemat Shafik said that an improvement in productivity could lead to rates remaining low for a longer period of time and added that the BoE shouldn't unwind its asset purchases until rates are high enough to cut if needed.



In her opinion, the biggest risk for UK stability is the possibility of a housing bubble forming and the size of the UK current account deficit. There are few signs of inflationary pressures, she said.



As far as the improvement on the UK labor market is concerned, Sahfik suggested that it was due to a rise in part-time jobs. She would check if private sector wages were rising above trend, before deciding on rates.



Moreover, Shafik signaled that the BoE could lower its estimate of the UK's economic slack. The recent pace of UK recovery is "striking," she said.



During the testimony the pound and the euro kept advancing , reaching 1.7123 and 1.3620 respectively.



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