LONDON (MNI) – Bank of England Monetary Policy Committee Member
Andrew Sentance has reiterated his call for higher rates in the wake of
the stronger-than-expected inflation numbers.
Sentance told BBC Radio 4 that the “wait-and-see” approach to rate
policy on the BOE MPC would be a stronger argument if it wasn’t that
interest rates had been reduced to such a low level and left there for
such a long time.
Sentance advised that rates should be raised “gradually and
carefully…to take into account new information that is coming on about
the economy as we go through a process of gradually moving interest
rates up. I think the worry I would have is if we don’t begin to move
interest rates up gradually now we’ll find further down the track we
actually have to move them up more sharply and that could deliver a
bigger jolt to confidence in the economy in the future”.
He noted that inflation was likely to be significantly above target
next year – he added, “having no response over that period is a risk to
the Bank’s credibility and I think we would reinforce that credibility
by gradually moving interest rates upwards”.
Sentance refused to say if other members of the MPC were coming
round to his point of view on rates but noted that the minutes of the
December MPC meeting would be out next week, adding: “I don’t want to
preempt that”.
But he added, “In terms of the broader economic commentary”, there
is a “recognition that we are beginning to move into a period where
interest rate rises make more sense”.
The comments follow those from BOE Deputy Governor Charles Bean
Monday. Bean said that the MPC would continue to watch inflation “like
hawks” and added that the risk of inflation expectations becoming
unhinged had “probably increased of late”.
“So we shall be watching these indicators, and their impact on
wages and prices, like proverbial hawks”, he continued.
–London newsroom: 00 44 207 862 7492; email: ukeditorial@marketnews.com
[TOPICS: M$B$$$,M$BDS$,M$$FI$,MT$$$$,M$$BE$]
