Andrew Sentance continues argument for higher interest rates

| March 28, 2011 | 0 Comments

Dr Andrew Sentance, one of the external members of the Bank of England’s Monetary Policy Committee (MPC), has once again argued the case for higher interest rates.

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.

Consumer Price Inflation (CPI) rose to an annual rate of 4.4% in February – the highest rate since October 2008.

The latest figures mean inflation is still way above the target of 2% – where it has been for more than a year.

The CPI inflation rate is a benchmark for the MPC but interest rates have been at the record low of 0.5% since March 2009.

In an interview with the Flintshire Leader, Mr Sentance said: “If you have interest rates too low for too long the problem we have is it becomes more difficult to raise interest rates more sharply in the future.

“I would like to see rates raised gradually now and not put it off,” he added.

Fellow policy members, Martin Weale and Spencer Dale, have also voted for interest rates to be lifted at the last two meetings.

In related news, Mr Sentance will leave the MPC when his term ends on 31 May.

He will be replaced by Ben Broadbent, a Goldman Sachs economist, who will assume his position in time for the June rate-setting meeting.

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