A Bank of England policymaker has said interest rates need to rise “relatively soon”, adding to signs that support is gradually building for the first increase in British borrowing costs since before the financial crisis.
Martin Weale, one of the Bank’s rate-setters, also said a rise would give the central bank scope to make cuts if the British economy runs into trouble in the future.
“With wage growth remaining firm, the tightening labour market means that inflation is likely to rise above target in two to three years’ time,” Weale wrote in an article for the Scotland on Sunday newspaper.
“Policy needs to be set with reference to this, rather than the current rate of inflation. As a result, it seems likely to me that the Bank Rate will need to rise relatively soon.”
Britain’s economy has grown strongly over the past two years and, despite recent signs of a slight slowdown, the Bank is expected to start raising rates in 2016, probably following the US Federal Reserve which could move as soon as this week.
