Bank of England's McCafferty says increasing interest rates now would help the BOE raise only gradually via ForexLive

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Speaking in the Sunday Times the other voter of rate hikes to Martin Weale says that he sees a more moderate pace of growth over the winter and that slack by mid-2015 is likely to be small, if any. He also says that it shouldn't be long before we see a pick up in overall wages.

In regards to raising rates while inflation is falling he acknowledges that falling commodity prices and a rise in the exchange rate are one-off effects that can be partly looked through for their effect on inflation and that raising rates now means that rise can be kept gradual and limited.

“Persistent low interest rates can increase the risks of financial instability, as well as allowing underlying inflation pressures to build, requiring more dramatic action later on”

“Starting to raise bank rate now makes it more likely that the increase required over coming years to deliver our inflation target can be kept gradual and limited”

Full story can be found here (gated)

BOE's Ian McCafferty will tell anyone who'll listen that rates need to rise

posted via ForexLive

Posted In: FuturesForexGlobalEconomics
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