The Bank of England has edged closer to its first interest rate rise in nine years after two policymakers told MPs an increase was needed soon to head off pay rise-induced inflation.
The UK is recovering in strength and is unlikely to be knocked off course by volatile global markets, the rate-setters said in an appearance at the Treasury select committee.
Ian McCafferty, one of nine members of the bank’s monetary policy committee, said the return of real wage rises this year and the prospect of higher oil prices would force Threadneedle Street to raise rates in the near future.
“Over the course of 2016 and 2017, the risks are that wages will pick up a little faster than the central forecast embedded in the August report, such that we would see a slightly greater inflation overshoot by early 2017 than the central projection in the forecast.”
