Bank of England hawk Kristin Forbes' interest rate warning sends pound higher
Bank of England rate-setter Kristin Forbes put the pound on the front foot as she warned that waiting too long to raise interest rates risked “sunburn” for the UK economy.
Sterling gained ground against the dollar and the euro as her comments reinforced expectations interest rates are heading higher in the months ahead.
Basking in ultra-low inflation without the preventative “suncream” of an interest rate rise “might spoil the rest of your holiday”, Forbes wrote in The Telegraph.
“With both sunshine and inflation there is a peril to living only in the moment.”
She added: “Interest rates will need to be increased well before inflation hits our 2% target.
“Waiting too long would risk undermining the recovery, especially if interest rates then need to be increased faster than the gradual path which we expect.”
The hawkish comments will increase speculation Forbes is soon ready to vote in favour of a rise.
Only one of the nine-strong monetary policy committee, Ian McCafferty, is voting for dearer money so far.
Official inflation figures due tomorrow are set to show the cost of living hovering at zero as food prices drop and oil prices fall back again, easing the pressure on the MPC to act.
