By Jason Douglas
LONDON--Spare capacity in the U.K. economy might be greater than the Bank of England's most recent estimate, one of the central bank's nine rate-setters was quoted as saying Monday.
David Miles said in an interview with Bloomberg that there could be a greater margin of slack in the economy than the 1% to 1.5% of gross domestic product the BOE estimated on Feb. 12. Mr. Miles is a member of the Monetary Policy Committee at the Bank of England.
"There's a range of views" on the amount of slack, Mr. Miles was quoted as saying.
"One shouldn't get the impression that everyone on the committee is absolutely convinced it must be in that interval. That was just the central estimate, if you will, of the committee."
Estimating the amount of spare capacity in an economy from unemployment or idling factories is a key judgment for central bankers, as economies operating near full capacity tend to generate inflation. Mr. Miles's remarks imply he believes the central bank can keep interest rates low for some time without sparking price gains.
"There is a material amount of slack. We don't see a case for tightening right now," he said.
Write to Jason Douglas at jason.douglas@wsj.com
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