![Sir John Gieve](http://i.imgur.com/dTcLJKy.png)
Former Bank of England deputy Governor Sir John Gieve believes Cutting interest rates again will not boost the economy, as rates are already at the lowest level ever.
Sir John predicts an extra cut to rates would be too small to make any difference in the short-term, and that in the long-run the British economy will have to wean itself off its debt addiction – something which a rate cut would not help solve.
Bank of England policymakers have indicated they expect to cut rates from 0.25pc, potentially to 0.1pc. More quantitative easing (QE) could also take place if Mark Carney and the other policymakers want to buy government and corporate bonds, pushing interest rates down in the wider bond market.
The monetary policy committee's "disposition is to make a further [rate cut] in November or December, but I personally wouldn't favour that," said Sir John, who sat on the MPC from 2006 to 2009.
"How effective could it be to take off a further 15 basis points? Someone likened steering the economy with interest rates to pushing on a string – you have to wonder whether a further marginal cut in rates, or further buying of gilts, is actually going to affect decisions in the real world on investment, consumption and savings."
Chancellor Philip Hammond will next month give his Autumn Statement in which he is expected to announce a boost to government spending, particularly focusing on investment in infrastructure and housing.
Sir John said that such fiscal policy has a little more power currently than the Bank of England's monetary policy, but that in the long-term the UK economy needs to rebalance, and constant stimulus will not help that to take place.
"The Bank of England and the Treasury have between them may tools to influence the economy. The monetary tools – low rates and quantitative easing – are in my view nearly played out as ways of boosting demand," he said, speaking at the Lloyds Bank Sterling Conference.
"We cannot borrow our way out of the long-term effects of Brexit and we shouldn't fool ourselves that we can put off forever the necessary rebalancing of the economy at home by continuing to pump up demand."
Figures from the Bank of England show that shoppers remain upbeat and are increasingly using credit cards and consumer loans.
Businesses and home-buyers, however, cut back over the summer, reducing the level of loan applications despite the interest rate cut in August, indicating Sir John's warning that Britons cannot be forced to borrow is coming true.
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