The Bank of England’s plan to increase interest rates only gradually means it should move earlier than would otherwise be the case, a top BoE policymaker told BBC Radio on Sunday.
“There’s a case for moving gradually because we won’t be quite certain about the impact of tightening the Bank Rate given everything that has happened to the economy,” BoE Deputy Governor Charlie Bean said in the BBC interview.
“It might not operate in quite the same way as before the crisis. So that’s an argument if you like for being a bit cautious, moving in baby steps to avoid making mistakes,” he said. “If you want to pursue that strategy you need to start taking those baby steps a bit earlier, otherwise you end up being behind the curve.”
The Bank of England last week said some of its top officials believed the case for keeping rates on hold at their record low level was now more finely balanced as Britain’s economy is growing at an annual rate of about 3 percent.