"The continuing build-up of household debt makes consumer spending more vulnerable to adverse shocks, and with it the outlook for inflation," Bean said in a speech. "The continuing build-up of household debt makes consumer spending more vulnerable to adverse shocks."
Encouraged by the lowest interest rates in nearly 40 years and surging house prices, British consumers have been on a borrowing binge to fuel an increase in spending which has been the economy's main prop through the global downturn. But BoE policymakers are now increasingly worried that debt is spiralling out of control and they held off from reducing interest rates earlier this month because they feared it would stoke borrowing and the housing market further.
Charles Bean said the central expectation of the Monetary Policy Committee was that consumer spending growth will ease back over the next year or two while house price inflation, running at over 30% annually according to the Halifax Bank, would slow markedly.
