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Inflation risks mean Bank of England should not delay rate rises – MPC member

  • 10/04/2018
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Inflation risks mean Bank of England should not delay rate rises – MPC member
The Bank of England (BoE) should not hold back on raising interest rates as the impact of wage pressures and Brexit on inflation need to be acted upon, according to a Monetary Policy Committee (MPC) member.

Economist and MPC member Ian McCafferty suggested in an interview with Reuters, there were “potential modest upside risks” to inflation forecasts which necessitated taking action on interest rates.

McCafferty, who was chief economic adviser to the Confederation of British Industry for a decade, said wage growth could actually be stronger than is generally expected by his colleagues.

He also noted that it was not a foregone conclusion that the inflation pressure from the Brexit vote in June 2016 had cleared either.

As a result, McCafferty said the bank “should not dally when it comes to tightening policy modestly”.

He was one of two members who voted for rates to rise in March, but did not confirm if he would carry this vote over to the next MPC meeting in May.

Since the Bank of England raised its Bank Base Rate for the first time in a decade in November, it has indicated it may need to accelerate the speed and scale of its future increases, with many analysts expecting this to mean another rise in May.

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