Sunday 30 January 2011

The interest rate hike is on its way

A rate hike is looking more likely. Here is Martin Weale, the newest member of the Monetary Policy Committee, writing in the Guardian.

As we cast our votes at the January meeting of the Bank of England's monetary policy committee – ahead of last week's GDP figures – I saw a compelling case for an increase in the bank rate.

My concern is that, if businesses and pay-bargainers come to regard an inflation rate of 3%-4% as normal, it will become more costly for the MPC to keep inflation close to the government's 2% target.

The longer inflation stays above the target and the further it rises, the greater the risk that inflationary expectations will become built in.


A rate hike at the next MPC meeting looks very likely.

4 comments:

Anonymous said...

Sorry, I disagree... It is the usual talk from the MPC. It is not what people say that counts, it is what people do... And currently, the MPC is do nothing...

Anonymous said...

really, to convey the correct emphasis, the last sentance should have been "And currently, the MPC is doing F**K ALL!"

H said...

I think a rate hike unlikely - it would require three (? pretty sure it's three) people to change their mind compared with last time. Unless there's some dramatic news out, the recent reported fall in GDP will prevent that change of mind taking place quite so soon.

Philippines Real Estate said...

If the MPC doesn't work on it, it'll have a bigger effect on the business, especially in the small market scale.