LONDON (MNI) – If Bank Rate hikes start early then they may not
need to rise so steeply, Bank of England Monetary Policy Committee
member Martin Weale said in an interview published Monday in the
Nottingham Post.
The MPC member, who voted for a 25 basis point Bank Rate hike at
the May meeting, set out the case for early action. The minutes of the
May meeting said that for Weale, and BOE chief economist Spencer Dale,
the case for a rate hike was “finely balanced”.
But both Dale and Weale have come out subsequently and made a
strong case for a hike.
“The sense is that interest rates have to be considerably higher
eventually. The question is when one starts raising them,” Weale said.
“Our inflation forecast was based on a rise starting perhaps late
this year. If one were to start earlier, perhaps rates wouldn’t need to
rise so steeply,” the MPC member added.
“It is not a view very different from the inflation forecast but
given where the level of inflation is now – and the prospect of it
rising further – it might be sensible for us to make a start now,” Weale
said.
Weale also restated the case for monetary tightening to avoid
second round inflation effects.
“Some of the price pressures are temporary. There are also worries
that after a sustained period of high inflation, it may be more
entrenched than people’s expectations,” Weale said.
“The longer the Bank goes on, as far as the public can see, not
doing anything about that, the greater is that risk,” Weale said.
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