FXStreet (Mumbai) - The Bank of England (BOE) should not wait too long to increase the base interest rate as it might overshoot the inflation target of 2% in the medium-term, policymaker Martin Weale noted on Sunday.
Weale argued that a strong labor market and firming wages "mean that inflation is likely to rise above target in two to three years' time."
"Policy needs to be set with reference to this, rather than the current rate of inflation. As a result, it seems likely to me that the bank rate will need to rise relatively soon, “he added.
He also said rate rises "might have to be reversed somewhat" if "events turn out very differently," referring to an increased level of uncertainty about the events unfolding in Asia and Europe.
"I will continue to monitor carefully developments both at home and abroad, taking account of possible effects of events in China. Any decision to vote to change bank rate will be made on the basis of the balance of risks, but with the comfort that, if subsequent developments mean that any increase needs to be reversed, that can be done," Weale concluded.
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