Rates need to rise, says Sentance
Share
Monetary Policy Committee member Andrew Sentence says interest rates still need to be increased after last week’s emergency Budget.
Sentance was the lone dissenter in last month’s MPC meeting by calling for a 0.25 per cent increase in base rate. In an interview with Reuters, Sentance says he stands by his view even after the fiscal tightening measures were announced.
He told Reuters: “I don’t think it changes my view, partly because the tightening put forward in the budget is not far off expectations before the Budget.”
Sentance said his views come from not just fiscal policies but from also assessing inflationary risk and domestic demand. He said a rate increase should be seen as a withdrawal of support rather than a hike.
He said: “I think it is desirable over this recovery to have a more gradual, gradualist approach to tightening policy. Now that would imply moving in small steps and gradually, because I think there is a risk if you start tightening sharply you risk knocking back private sector confidence, which is the last thing I would want to do.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
