Bank of England policy maker David Blanchflower said the U.K. recession may intensify "significantly" and it's too early to gauge when the economy will start to recover, Bloomberg reported.
"This is not the bottom," he said in an interview at Stirling University in Scotland today, before delivering a speech. "I expect the first quarter to be worse than the fourth, probably significantly worse. I don't see any signs of green shoots at the moment."
The British economy shrank the most since 1980 in the final three months of last year as spending by consumers and companies shriveled, data showed today. Bank of England policy makers reduced the benchmark interest rate to 1 percent this month, the lowest ever, and defeated Blanchflower's bid to cut it even further to 0.5 percent.
The bank's forecasts show that "with monetary policy where it is, overly restrictive, we cannot get inflation back to target unless we ease further," Blanchflower said. "The question is, how far close to zero is the lower bound? I don't exactly know."
The lowest possible interest rate may be lower than 0.5 percent, "but at least let's get there and stay there," Blanchflower said.
With rates already at the lowest in the bank's history, Blanchflower suggested that there's a risk policy makers will be too slow to implement non-conventional measures on the economy.
"The evidence is that you get to close to zero as quickly as you can, you get to quantitative easing as quickly as you can," Blanchflower said. "The mistakes have been doing too little too late."
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