August may see further base rate rise

by Gill Montia

Story link: August may see further base rate rise

A member of the Bank of England’s Monetary Policy Committee (MPC) has made a speech which could indicate that interest rates will rise again in the near future.

Andrew Sentance, a leading member of the MPC and former chief economist to British Airways, has spoken of strong global demand putting upward pressure on a wide range of energy and commodity prices, including oil.

In order to deal with these pressures and taking into account current research showing that further price rises in manufacturing costs are to be expected, Mr Sentance believes that inflationary trends may need to be curbed by yet higher interest rates.

More particularly, he believes that failure to take action now could result in interest rates becoming higher in the long-term.

The Bank of England raised its base rate by a quarter of a percent, to 5.75%, in June and some analysts now expect a further rise as early as August, when the next Inflation Report is due.

Mr Sentance’s views are in line with recent comments made by the Bank of England’s deputy governor, Sir John Gieve, who has expressed doubts as to whether enough has yet been done to bring inflation down to the Government’s target of 2%.