Bank of England’s Haskel says policy should lean against sticky inflation

The Bank of England needs to push back against the risk that high inflation proves unexpectedly sticky, and may need to raise interest rates further, Monetary Policy Committee (MPC) member Jonathan Haskel said on Thursday.

Haskel – who in the past has sometimes voted for bigger interest rate rises than the majority on the MPC – was speaking a day after official figures showed inflation fell less than expected by markets when it dropped to 8.7% from 10.1%.

British government bond prices have tumbled since the data release as investors have priced in a greater number of interest rate rises by the BoE, which had previously been seen as very near the end of its rate-rising cycle.

“Further increases in Bank Rate cannot be ruled out,” Haskel said in a speech at the Peterson Institute for International Economics in Washington.

“I prefer to lean against the risks of inflation momentum. As difficult as our current circumstances are, embedded inflation would be worse.”

The BoE has raised rates 12 times since December 2021, taking interest rates to 4.5% earlier this month. Markets now expect rates to reach 5.5% by November.

This report’s information was first seen on ZAWYA; to read more, click this link.