Sentance: Raise interest rates now

City A.M. Reporter
The Bank of England should start to raise interest rates from a record low of 0.5 per cent because Britain's economy and global conditions have improved, Bank policymaker Andrew Sentance has said.

Sentance, who has been voting for a quarter-point rate rise since June, said the economic turnaround means the UK economy needs less stimulus from the central bank's monetary policy.

"What I am in favour of is a gradual rise in interest rates which will not destabilise the recovery and will not disrupt business and consumer confidence," he told BBC Radio.

"The global economy has turned round and the UK economy has grown by round about 2.5 per cent over the last year. So those are all the conditions where we don't need so much stimulus from monetary policy, such a low level of interest rates."

The Bank's rate-setting Monetary Policy Committee was split three ways at its October meeting, according to minutes released this week.

Policymaker Adam Posen voted to raise the £200bn quantitative easing programme by another 50 billion pounds. Sentance, the committee's most hawkish member, reiterated his call for a quarter-point rate rise and the remaining seven members opted for no change.

Sentance added that the recovery was "a bit erratic."

"Some businesses I speak to say 'well, we see a good month and then it's quiet the next month. That unevenness is quite common at this stage of the recovery," he told the BBC.