LONDON: Waiting too long to raise interest rates risks undermining the UK’s recovery, Bank of England policymaker Kristin Forbes has warned.
Monetary Policy Committee member Ms Forbes said a rate hike took between one and two years to take full effect.
As a result, rates would need to rise “well before” inflation hit the Bank’s 2% target, she said.
Her comments, in a column in The Telegraph, suggest interest rates could rise sooner than currently expected.
“Waiting too long would risk undermining the recovery – especially if interest rates then need to be increased faster than the gradual path which we expect,” she warned.
‘Bit more time’
Ms Forbes, who joined the nine-strong MPC committee responsible for setting interest rates in July last year, said keeping interest rates at their current historic low of 0.5% risks “creating distortions”.
But she said that the pound’s continuing strength, together with recent falls in energy and commodity prices, would keep inflation low for longer, and gave the MPC “a bit more time”.
“There is no need to act before we are confident that inflation is heading back toward 2% within about two years as expected,” she added.
