Consensus is growing that interest rates have been kept too low for too long and that inflation, which stands at 4.5 per cent, is accelerating dangerously, just as inequality deepens, growth flatlines and incomes decline. Worse still, as we enter the age of austerity, is that near-zero interest rates are artificially supporting an already unstable housing market.
Spencer Dale, chief economist at the Bank of England and a member of the Monetary Policy Committee (MPC), has spoken of the immediate need to raise the Bank’s base rate and then to keep nudging it upwards. “I don’t take lightly the impact this could have on some families,” he said in an interview with the Financial Times on 21 May. “But I think the cost to our economy as a whole – were inflation to persist for longer and our credibility [to] start to be eroded – would be even worse.”
Content from our partners
