Bank of England Governor Andrew Bailey has said inflation has “strengthened (the) case” for a rate rise.
The Bank’s Monetary Policy Committee (MPC) has repeatedly voted to keep the base rate at 0.25 per cent despite signs of growing inflation.
But last Thursday the MPC raised inflation forecasts to north of 4 per cent by the end of the year.
Bailey told the Society of Professional Economists on Monday evening that “all of us (in the MPC) believe that there will need to be some modest tightening of policy to be consistent with meeting the inflation target (Of 2 per cent) sustainably over the medium-term.”
The Governor said he was monitoring the situation closely but he remains of the belief that many of the inflationary pressures are transitory.
Bailey said the economy was still in the recovery phase after the Covid-19 pandemic and that there were still ‘hard yards’ to navigate.
“It is a saying that originated in sailing, though I associate it more with forward play in rugby,” he said.
“I, and other MPC members, have also used the analogy of a bridge to describe the role of economic policy in the age of Covid-19, the bridge to the other side of Covid-19.
“We are still on that bridge.”