LONDON — Gertjan Vlieghe, probably the most dovish member of the Bank of England’s Monetary Policy Committee believes that the bank may need to raise interest rates “in the coming months,” making a first hike in more than 10 years more likely than ever before.
Speaking at the annual conference of the Society of Business Economists, Vlieghe said that if the current “data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth” continue as they are, the bank could raise rates in the short term.
Normally, one member of the MPC giving their views on interest rates would not likely signal a big shift for the bank, but Vlieghe has previously been almost continually downbeat on the prospects of interest rate hikes, so his intervention is a very clear sign that the bank is close to hiking.
The comments come less than 24 hours after the bank’s Monetary Policy Committee said that “some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.” In central bank-ese, that’s as pretty clear of a hint as it gets.
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