–Bloomberg Interview: Sentance: Stg Boost From Hike Not Unwelcome

LONDON, April 15 (MNI) – Sterling weakness threatens to push
inflation above 5%, Bank of England Monetary Policy Committee Member
Andrew Sentance told Bloomberg in an interview published today.

“There’s still quite a bit of evidence that there’s some further
upward pressure on inflation to come,” Sentance was reported as saying.

Sentance said a boost to the pound from a rate increase would not
be an ‘unwelcome development’ in the fight against inflation.

“If a rise in interest rates began to counter some of that weakness
of the pound, I wouldn’t see that as an unwelcome development in terms
of controlling inflation.”

Sentance said that the recent employment data showed that the
recovery is continuing, but said it was likely to prove uneven:

“We should not be surprised that growth is uneven and that there
are fluctuations,” he said.

“If you look at the broad picture from business surveys, the labor
market, alongside GDP it looks like the recovery is continuing.”

Sentance said that, by not having raised rates earlier, the MPC was
now ‘exposed':

“I do think the committee is in a more exposed position than it
needs to be by not having taken earlier action and that will be
something for the committee as a whole to debate and consider.”

Sentance first voted for a hike in Bank Rate back in June 2010, and
continued to vote for 25 basis point increases in every meeting until
February 2011 when he voted for a 50 basis point increase.

The latest consumer price data showed CPI falling back to 4.0% in
March from 4.4% in February. The BOE MPC’s forecasts in the latest
Inflation Report show it will not peak until the third quarter of this
year, when it is expected to average 4.45%. Sentance believes it may
well head even higher than the BOE’s central forecast.

At the March MPC meeting 3 of the 9 strong committee voted to hike
rates and the minutes of the April meeting are out on April 20.

–London newsroom: 00 44 2078627492; email:ukeditorial@marketnews.com

[TOPICS: M$B$$$,M$$BE$]