A Bank of England policymaker has reinforced expectations that the first rise in interest rates will come as soon as next spring, in remarks that pushed up the pound.
Ian McCafferty, a member of the monetary policy committee, said that market expectations that the Bank of England will start to raise rates in the second quarter of 2015 are “not unreasonable”. He told news agency Reuters in an interview that wage deals in coming months would be “quite critical” as policymakers watch for inflation risks.
Under governor Mark Carney, earlier this month the Bank overhauled its forward guidance policy on when rates would rise from their record low of 0.5%. At the time it said a view in markets that rates could rise in the second quarter of 2015 was consistent with its goal of keeping inflation close to the government-set 2% target. McCafferty told Reuters: “In that sense, you’d have to say that that market curve is not unreasonable.
“The exact timing of course is going to depend on events that have yet to unfold in terms of how the recovery proceeds over the course of the next six to 12 months or so.”
via The Guardian