The Bank of England’s new deputy governor, Minouche Shafik, has hinted to MPs that interest rates could be about to go up, the FT reports.
She made the comments while being grilled by MPs about her previous experience in economics.
Shafik said ensuring a smooth exit from the very low interest rate environment would be one of her biggest challenges.
She also said it is expected the bank would narrow its estimate of the spare capacity in the economy from a previous range of 1-1.5% of GDP, according to the FT. This adds to signals from the BoE that interest rate rises may happen soon.
Shafik said: “If we can start to see improvement in productivity numbers, rates can stay lower for longer. If we don’t we’ll be facing supply pressure and price pressures, and rates will have to go up.”
