LONDON: Interest rates in the UK could rise sooner than anticipated, according to one of the Bank of England’s newest rate setters, former White House adviser Kirsten Forbes.
In an interview with the Wall Street Journal, Ms. Forbes said that strong economic growth in the US and falling oil prices could trigger a need for a rise in UK interest rates from the current record low of 0.5 per cent which has been in place since 2009.
Her comments come ahead of the preliminary UK fourth quarter GDP figures, due to be released tomorrow, which are expected to show that growth slowed to 0.6 per cent in the final months of last year.
Ms Forbes said: ‘If the risks that I’m focusing on to our last forecasts come through, I think there is a chance that inflation will pick up faster than people had been expecting in the medium term, which then would most likely merit an increase in interest rates sooner than people are currently expecting’.
‘I wouldn’t be surprised if inflation falls more sharply in the short term, but then as growth picks up, the growth effects boost inflation more in the medium term’.
