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King hints at further interest rate rises
15/02/2007
Mervyn King, the governor of the Bank of England, has hinted that its monetary policy committee (MPC) may raise interest rates again in the near future.
Mr King indicated that the Bank is concerned about the direction of inflation in the long-term, from next year and beyond.
However, on releasing the MPC's quarterly inflation report, he also suggested that inflation is set to drop in the short-term, due to a number of factors including lower electricity and gas bills.
Commenting on the current inflation rate, the governor remarked: "Just as three per cent inflation [in December] didn't mean that the end of the world was nigh, so 2.7 per cent [in January] does not mean that we can ignore concerns about inflation ahead."
Jonathan Loynes, chief UK economist at Capital Economics, added that the February report "made it pretty clear" that the MPC is expecting to increase interest rates again.
Meanwhile, Howard Archer at financial analyst Global Insight said that he thought interest rates would peak at 5.5 per cent.
Mr King indicated that the Bank is concerned about the direction of inflation in the long-term, from next year and beyond.
However, on releasing the MPC's quarterly inflation report, he also suggested that inflation is set to drop in the short-term, due to a number of factors including lower electricity and gas bills.
Commenting on the current inflation rate, the governor remarked: "Just as three per cent inflation [in December] didn't mean that the end of the world was nigh, so 2.7 per cent [in January] does not mean that we can ignore concerns about inflation ahead."
Jonathan Loynes, chief UK economist at Capital Economics, added that the February report "made it pretty clear" that the MPC is expecting to increase interest rates again.
Meanwhile, Howard Archer at financial analyst Global Insight said that he thought interest rates would peak at 5.5 per cent.