A higher exchange rate and lower export growth would be a price worth paying to prevent an inflationary spiral gripping the UK economy, the leading interest rate hawk has claimed in a parting shot to his Monetary Policy Committee (MPC) members, reports the Guardian.
Sentance, who steps down this month from the Bank of England’s MPC said his colleagues on the committee were wrong to believe there was little they can do to arrest inflation that has sent prices soaring by 4.5%.
With much of the UK’s inflation generated by the 25% decline in the value of the pound – which has pushed up the cost of imported goods – a rise in interest rates, he insisted, would be a quick cure as it would quickly push up the value of the pound and bring down import costs.
