Tuesday 7 September 2021 12:48 pm

Bank of England hawk Saunders suggests interest rates will rise in 2022

Your mortgage rate looks more likely to rise next year, according to one Bank of England rate-setter.

The Bank of England may need to increase interest rates next year if the UK’s GDP recovery momentum holds and inflation becomes stickier, policymaker Michael Saunders said today.

Saunders, who in August voted for an early stop to the BoE’s £895bn quantitative easing plan, repeated his view that continued bond-buying purchases risked increasing medium-term inflation expectations.

“As to when I think interest rates might rise, that would depend on the economic outlook,” Saunders told an online event.

“If the economy continues to recover, and inflation shows signs of being more persistent, then it might be right to think of interest rates going up in the next year or so.

“But that is not a promise and depends on economic conditions,” he said.

Saunders said any rise in rates from their record-low level of 0.1 per cent should be relatively limited.