Former members of the Bank of England’s Monetary Policy Committee have warned that interest rates will need to be raised by as much as 6 per cent to stem inflation, a level the bank said was difficult for households and businesses.
According to “Bloomberg” William Potter, Andrew Sentines and Diane Julias, who were previously members of the Monetary Policy Committee at the Bank of England, and expressed their concern about high prices, said that the central bank will need to move forward with the decision.More interest rate increases throughout the summer.
“There will be a need to raise rates significantly,” Potter said in an interview, predicting a peak of “no less than 6 per cent” and that “there is no way an interest rate of 4.5 per cent will achieve the result” required.
The comments come after a sudden increase in a measure of core inflation, which excludes volatile energy and food prices, to the highest levels in more than thirty years.
Investors were quick to factor in another percentage point increase in the central bank’s base rate to 5.5 per cent, a level not seen since early 2008 before the global financial crisis.
According to forecasts by Bloomberg Economics on Friday, the British economy is likely to slip into recession in the second half of this year if the sudden shift in market expectations persists throughout the summer.
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