Tide is turning towards interest rate hike, says Bank’s Sentance

THE BALANCE of opinion is turning towards a gradual rise in interest rates, the Bank of England’s chief hawk Andrew Sentence said yesterday.

“I’m not sure I am swimming against the tide because I think the balance of opinion has been shifting in that direction,” Sentance said, referring to the growing support for normalisation of Bank rate on the monetary policy committee.

Sentance was a lone voice on the committee for much of last year, voting for higher rates from June onwards. This year he has been joined by two other members of the committee – Martin Weale and Spencer Dale – who are voting for a rise. Weale and Dale want a 0.25 per cent rise, while Sentance is pushing for 0.5 per cent.

Many of the factors pushing up prices in the UK may not be as “temporary” as some economists predict, Sentance said on Sky News.

“We can see the VAT impact is going to be temporary but some of the other factors coming from the global economy, we can’t be sure that they will subside quickly because the world economy is growing strongly,” he added.