Britain should begin to raise interest rates as early as possible to avoid sudden and painful shocks in the future, warns a representative of the Monetary Policy Committee of the Bank of England.
In an interview with the Financial Times Martin Weale , an external member of the Committee of the BoE ‘s monetary policy , noted that even a ” gradual ” increase in interest rates may lead to an increase in the cost of credit of up to one percentage point per year , it is much faster than expected by the market .
Martin Weale said that ” gradual ” increase in rates , according to him, means an increase in “no more ” than 25 basis points in the quarter , while investors predict a rise in the amount of 1.8 percentage points over 3 years.
The Central Bank has repeatedly stated that the rate hike would be ” gradual and fixed” when the economy strengthened so that it will become necessary. However wil warns that if the Committee plans to raise rates “gradually” , he should not delay this .
“If you want to increase occurred slowly , you need to start as early as possible ” – he warned in an interview with the Financial Times. ” The question is: when it comes this” before ” ? Of course, we can never be sure , but the economy … saves quite rapid growth in demand . “
” So I have to ask the next question – and the answer is now less certain than it would have 6 months ago – ” At what level should be the interest rate at the moment? “
Economists believe that the BoE , which kept interest rates at a record low of 0.5% since 2009 , could become the first major central banks , which raise rates after the ECB tightened monetary policy in summer 2011 .