Business

Bank of England's Martin Weale wants interest rate rise

Sterling note and coins
Image caption Mr Weale warned that the recent rise in inflation could become self-perpetuating

A member of the Bank of England's interest rate-setting committee says the central bank should start raising rates now to avoid a sharp rise later.

"[It would] protect us from a squeeze later on, needed to get people's inflation expectations back towards the 2% target," Martin Weale said.

He told the BBC that even with a rate rise, inflation would not fall quickly.

The Monetary Policy Committee member has joined colleague Andrew Sentance in voting for a rate rise since January.

The two economists are concerned by the recent run-up in inflation, boosted by commodity prices and the increase in VAT.

The Consumer Prices Index rose at an annual rate of 4% in January, twice the Bank of England's official target.

"I certainly wouldn't expect raising interest rates in the short term to bring the inflation rate rapidly back to target," Mr Weale told Radio 4's World at One programme.

Inflation could only be brought down quickly via a much more rapid rate rise, which he did not favour as he believed it would destabilise the economy.

Although inflation has been boosted in recent months by temporary factors, Mr Weale expressed concern that this could feed into people's expectations about future inflation, making price rises self-perpetuating.

"If businesses and people bargaining for wages expect high rates of inflation then there's a risk that they may build those expectations into their current behaviour," he said.

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