Ex-MPC member Danny Blanchflower says rate rise would harm the UK

Jessica Morris
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Blanchflower said by Carney is trying to harm the UK by raising rates (Source: Getty)

Former Bank of England policymaker Danny Blanchflower has warned that an interest rate rise in the near future would harm the UK.

Read more: Carney fuels speculation of 2015 interest rate hike

"It may well be that the Fed [US Federal Reserve] is going to put off raising so it seems rather strange that Carney is trying to harm the UK by raising interest rates hurting mortgage holding and strengthening the pound. It seems a rather strange thing to do, I would have advised against it," he told the BBC.

City analysts think some members of the Monetary Policy Committee will vote for a rate hike at a meeting on 6 August, when the outcome, the minutes and the quarterly inflation report will all be published at the same time.

Redwood, Philip Shaw at Investec and JP Morgan’s Allan Monks all predict up to three MPC members will change their vote. Economists are broadly predicting a rate hike in the first half of next year, but say the possibility of a late 2015 hike is rising.

During his time on the Monetary Policy Committee, Blanchflower earned a reputation as an "arch dove", continually voting for interest rate cuts from October 2007 to March 2009. The Bank of England made its first major interest rate cut shortly after the bankruptcy of Lehman Brothers in 2008.

His comments came after Bank of England boss Mark Carney dropped another hint that interest rates could rise ahead of the market's expectations during a speech in Lincoln last night. He said that the decision as to when to start raising interest rates was likely to come "at the turn of this year".

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