Monetary Policy Committee member Martin Weale says interest rates should start rising now to avoid sharp and more damaging rises in the future.
Speaking to BBC Radio 4’s World at One programme yesterday, Weale (pictured) said: “My expectation would be that – although there would be some costs – it would protect us from a squeeze later on, needed to get people’s inflation expectations back towards the 2 per cent target.”
The Consumer Prices Index measure of inflation hit 4 per cent in January, up from 3.7 per cent in December.
Meanwhile the Retail Prices Index went from 4.7 per cent in December to 5.1 per cent.
Weale joined fellow MPC member Andrew Sentence in voting for a 0.25 per cent increase to interest rates at last month’s MPC meeting.
Bank of England governor Mervyn King wrote to Chancellor George Osborne earlier this month under the requirement to explain why CPI inflation continues to overshoot its 2 per cent target.
In his letter King hinted that the base rate may rise in May, with further increases possible by the end of the year.