"This uncertainty points to the argument that we should wait for firmer evidence before making any policy change and least in the absence of any strong arguments for an immediate change."
In a speech given today, he dismissed two arguments for rate cuts. First, the he rejects the notion is that markets would be disappointed were there to be no easing in August, noting that market participants should remember that the MPC sets policy each month – not in advance.
Secondly, he gives little weight to the argument that early action is needed to reassure people, noting there was no sign consumers or businesses were “panic-struck”.
However the Bank of England's chief economist, Andy Haldane, said last week that the MPC should introduce a "package of mutually-complementary monetary policy easing measures" next month in order to protect the economy and jobs from a downturn.
Haldane said: "This monetary response, if it is to buttress expectations and confidence, needs I think to be delivered promptly as well as muscularly. By promptly I mean next month, when the precise size and extent of the necessary stimulatory measures can be determined as part of the August Inflation Report round."
Yet Weale said: "For there to be a case for easing policy I will need to expect weakness in output to be large enough more than to compensate for any overshoot in inflation on the assumption that policy is unchanged in the near term."
Weale admitted that uncertainty may cause people to reduce spending, but argued that following the appointment of a new Prime Minister, "at least some of the immediate sense of uncertainty which followed the vote may have dissipated, and consumers may be more influenced by this than by the technicalities of future trade agreements".
Weale concluded: "The immediate aftermath of the referendum has passed with less financial disturbance than might have been feared. Despite unprecedented exchange rate movements, I have not seen any visible signs of questions about the ability of financial institutions to manage their affairs. There has been nothing like the banking crisis of 2007-9 of which Northern Rock was an early casualty."
