fbpx

Bank policymaker says further interest rate rises ‘cannot be ruled out’

Jonathan Haskel, writing in The Scotsman, spoke of the ‘difficult judgements’ the Bank has to make to bring inflation down to its 2% target.

Further interest rate rises “cannot be ruled out” amid decades-high inflation in the UK, a Bank of England policymaker said.

Jonathan Haskel, writing in The Scotsman, spoke of the “difficult judgements” the Bank has to make to bring inflation down to its 2% target.

The economist, an external member of the seven-person Monetary Policy Committee (MPC), reiterated that the role of the Bank is to ensure inflation does not become embedded in the economy and that prices stop spiralling.

“Things look better than a few months ago”, he wrote.

“Since October last year, inflation has fallen from 11.1% to 8.7%, and we expect it to be around 5% by the end of this year.

“But inflation remains much too high.”

Bank of England policymaker and economics professor Jonathan Haskel (PA)

Mr Haskel acknowledged that higher interest rates lead to higher borrowing costs, such as on mortgages and business loans, at a time when the price of essentials is rising rapidly, adding: “We understand that will be difficult for some people and it’s an important consideration in our policy decisions.”

It comes after the MPC hiked the UK interest rate to 4.5% last month, the 12th increase in a row since rates began rising in December 2021.

British bank HSBC UK temporarily withdrew mortgage rates available via broker services on Thursday after facing high levels of demand as homeowners looked to lock down fixed-rate deals before rates rise further.

Mr Haskel said the MPC’s decision-making has been made harder by the fact there is no “similar experience from the recent past to draw on”.

Inflation has not reached the recent high levels since the 1970s and 1980s, before the Bank of England became independent and the MPC’s inflation target was introduced.

It followed fellow policymaker Huw Pill admitting the Bank’s economic forecasting models have led to mistakes over its inflation expectations, which have been too low.

Mr Haskel added: “My own view is that it’s important we continue to lean against the risks of inflation momentum, and therefore that further increases in interest rates cannot be ruled out.”

More from Perspective

Get a free copy of our print edition

News

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed

Your email address will not be published. The views expressed in the comments below are not those of Perspective. We encourage healthy debate, but racist, misogynistic, homophobic and other types of hateful comments will not be published.