Sentance urges rate rise

BANK of England hawk Andrew Sentance used his swansong speech yesterday to warn that the UK’s persistently high inflation rate could damage the Monetary Policy Committee’s (MPC) credibility.

Sentance, who has repeatedly called for an interest rate rise, told a Pro-Manchester lunch that global economic growth and the pound’s depreciation had pushed inflation higher, while spare capacity in the economy had not had the effect of reducing it.

“A large burden of weight is being placed on the view that the Bank of England will return inflation to target before too long, despite not having delivered on promises to achieve just that over the past couple of years,” he said. “I do worry that the MPC’s credibility and commitment to the inflation target may already have been eroded by not adjusting policy settings soon enough.”

Sentance steps down on 31 May.