Andrew Sentence again talks of raising interest rates to curb inflation

| February 17, 2011 | 0 Comments

Andrew Sentance, one of the Bank of England’s Monetary Policy Committee (MPC) members, has once again spoken of stubbornly high inflation.

Mr Sentance has, since last June, voted for the base rate to be lifted, in order to combat high inflation.

He has previously warned that the central Bank faces losing its credibility if it is not seen to be fighting inflation.

In a speech in London today, Mr Sentance said: “One of the benefits which we might see from a policy of raising interest rates is a modest appreciation of sterling, which would mitigate the impact of global inflationary pressures in the short term and help to steer inflation back to target over the medium term.”

His speech comes just a day after the Bank of England presented its Quarterly Inflation Report.

The Bank‘s Governor, Mervyn King, said inflation will continue to stay high in the first half of 2011.

Mr King warned inflation might even reach 6% (far exceeding the Government’s 2% target) but it will fall back next year.

The CPI inflation rate is a benchmark for the Bank’s Monetary Policy Committee but the Bank continues to keep interest rates at the record low of 0.5%.

However, economists are expecting rates to rise from the current level of 0.5% to at least 1.25% by the end of the year.

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