The base rate has been held at the record low of 0.5 per cent since 2009, a stance which former monetary policy committee (MPC) members Kate Barker and Andrew Sentance believe could do the UK more harm than good.
“I would like to see western economies prepare the ground for a rise in interest rates”, Sentance told the influential Treasury Select Committee of MPs.
He fears that the sustained ultra-low rates could become seen as normal to borrowers, making it very difficult and painful to return to more standard higher interest rates.
“I am surprised that we have kept with the monetary policies that we put in place in 2009 for so long,” he said.
Meanwhile Barker expressed regret at the low level of interest rates in the boom years before the credit crunch.
“We ran monetary policy rather badly up to the crisis,” she said.
“I think it might well have had to be substantially tighter.”
However Barker added she does believe quantitative easing has been useful in supporting GDP.