Mortgage News
MPC member calls for immediate rate rise
Monetary Policy Committee (MPC) member Martin Weale has said interest rates must move now in order to contain inflation and prevent sharper, more damaging increases in the future.
Speaking to BBC Radio 4, Weale said raising base rate would protect the country from a “squeeze” later on and reduce consumers’ inflation expectations back towards 2%.
However, Weale said that raising rates would not mean inflation will fall quickly, with the Bank of England forecasting that CPI could hit 5% after rising to 4% in January.
He said: “I certainly wouldn’t expect raising interest rates in the short term to bring the inflation rate rapidly back to target.”
Weale, who joined the MPC in 2010, warned that the recent rise in inflation could affect people’s expectations of future inflation and make price rises self-perpetuating.
He said: “If businesses and people bargaining for wages expect high rates of inflation, then there’s a risk that they may build those expectations into their current behaviour.”
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Weale joined MPC hawk Andrew Sentance in January in calling for Bank base rate to be increased to 0.75%.
The minutes of the MPC’s latest meeting will be published on 23 February, revealing if any further MPC members have altered their vote in favour of raising base rate.