BoE should avoid being too specific when it comes to rates guidance - Miles

By Andy Bruce

LONDON, Sept 30 (Reuters) - The Bank of England should avoid being too specific when it tries to guide the public about the future path of interest rates and broadly stick to its current approach, one of its policymakers said on Tuesday.

Monetary Policy Committee member David Miles said the BoE's current message - that rate hikes will be gradual and to levels below those seen before the financial crisis - was still useful because it was substantive and clear.

While the BoE could offer more guidance about the likelihood of different paths for future interest rates, as some other central banks try to do using charts of different kinds, Miles said it was probably best to stick with its present approach.

"Currently it might be just as useful - and probably less misleading and possibly even more accurate - to give forms of guidance which are more qualitative," said Miles, speaking at the London School of Economics.

He then cited the BoE's message that "interest rate rises will probably be gradual and likely to be to a level below the old normal" as an example.

Miles said that in theory there could be benefits to the central bank giving more information about the likelihood of different paths for future rates, reflecting the range of views among policymakers or various economic scenarios.

However, he was not convinced that assigning probabilities to specific scenarios for interest rates was a good idea.

Based on the experience of other central banks, it would be hard to explain a range of probabilities for different potential paths for interest rates in a way that could be widely understood.

The U.S. Federal Reserve's "dot charts" - a published matrix of where individual policymakers think interest rates are heading - conveyed differences of opinion among rate setters, but not any sense of how certain their views were, said Miles.

The central banks of Sweden and New Zealand publish charts to project the possible range of interest rates in future, but each produced them using very different methods.

The BoE introduced forward guidance in August 2013 and initially linked it to unemployment. But following a sharp fall in the jobless rate the BoE revamped its policy in February to focus on broader measures of slack in the economy.

Some economists have criticised the BoE for sending confusing messages about the outlook for rates, and one lawmaker likened the central bank to an "unreliable boyfriend", blowing hot and cold on the timing of rate hikes. (Additional reporting by David Milliken; Editing by Hugh Lawson (Other OTC: LWSOF - news) )