Weale (pictured), one of the MPC’s most hawkish members who has sat on the committee since 2010, said the Bank needs to respond to rising wages and low unemployment, regardless of low oil prices.
He previously voted for a rate rise late last year alongside fellow member Ian McCafferty, but has reversed his stance since then as oil prices fell sharply, which he said gave the MPC “breathing space”.
Speaking to the Financial Times, Weale said: “If you had asked me last autumn how rapidly I thought wages might pick up, looking at the most recent numbers, the movement seems to have been a bit faster than that.
“Recently, it seems that rather than [wage increases] fizzling out, the labour market … is fizzing away nicely”.
Weale said that real wages rising at the fastest rate since the crisis, combined with stable unemployment at 5.5%, meant the Bank of England needed to reassess its stance on rates.
He also rejected the idea that raising rates too quickly was a greater risk than holding fire, according to the paper.
“If you were not to change policy rates because of what might happen, then I think you would end up not changing them. And … not changing rates ever would have worse effects than adjusting interest rates to fit the economic circumstances,” he said.
However, Weale does not plan to vote for a rate hike at the next committee meeting, as it coincides with Chancellor George Osborne’s Budget on 8 July, as well as the ongoing uncertainty in Greece.
Current forecasts indicate the US Federal Reserve will raise rates in the second half of this year, while the UK is expected to follow in 2016.
