Bank of England policy maker Jonathan Haskel said the central bank must guard against persistent inflation risks, an indication he may back further interest-rate increases.
Writing in the Scotsman newspaper, Haskel said further hikes in the BOE’s benchmark lending rate can’t be ruled out because prices are still rising faster than the 2% target.
“We are monitoring indicators of inflation momentum and persistence closely,” Haskel wrote in a column published Monday. “My own view is that it’s important we continue to lean against the risks of inflation momentum, and therefore that further increases in interest rates cannot be ruled out.”
The remarks firm up expectations of investors and economists that the BOE is likely to lift borrowing costs again this month and probably through the summer. The nine-member Monetary Policy Committee has raised its rate from near zero at the end of 2021 to 4.5%, and markets anticipate a peak around 5.5% later this year.
“Inflation remains much too high,” Haskel wrote. “On the MPC we remain committed to bringing it back to our 2% target, and that is what we will do. Our tool for doing this is interest rates.”
He also said rates wouldn’t affect the price of goods directly. Instead they will “ensure the resulting inflation does not become embedded in the economy, and prices do not continue to increase at the rates we’ve seen recently.”
Lifting the key lending rate is likely to push up the cost of mortgages and business loans further, he said.
“We understand that will be difficult for some people,” Haskel added. “It’s an important consideration in our policy decisions.”
