Interest rates could rise within months, says Bank official

Bank of England.
PA

A senior Bank of England official has said the “moment is approaching” when it might need to raise interest rates.

Gertjan Vlieghe, who is on the Bank’s Monetary Policy Committee, says there are signs the UK economy is picking up and can handle a rate increase.

It comes after the Bank voted on Thursday to keep rates at 0.25%, but hinted it could raise them in the “coming months”.

Mr Vlieghe’s comments sent the pound higher against the dollar and euro.

Sterling rose above $1.35 to a year high against the dollar, and gained nearly 1% against the euro to rise above 1.13 euros.

Mr Vlieghe has previously argued against increasing interest rates.

Pay pressure

In a speech on Friday, he said: “Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure.

“But the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise.”

He points to unemployment falling to record lows, as well as signs that households are spending more and that wages are rising in the private sector.

“If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in Bank Rate might be as early as in the coming months,” Mr Vlieghe said.

The Bank’s rate rise hint on Thursday had already pushed the pound up against the dollar and euro, as higher interest rates would make sterling more attractive to investors.

Author: admin

Share This Post On

Submit a Comment

Your email address will not be published. Required fields are marked *