King Hints At Interest Rate Increase

Mervyn King, governor of the Bank of England, has hinted that a hike in interest rates may be necessary to stop the economy overheating.

In his Mansion House speech, he prioritised raising rates over a reversal in quantitative easing and selling gilts back into the market.

Said King: ‘[Monetary tightening] is most likely to be through a rise in bank rate with asset sales being conducted later in an orderly programme.’

The warning follows a fall in consumer price inflation to 3.4 per cent last month from April’s 17-month high of 3.7 percent. But King said he was concerned about an ‘apparent rise in inflation expectations’.

He added: ‘We have always explicitly recognised that there is a significant chance that inflation may turn out to be above target.’

Read more: http://www.growthbusiness.co.uk/news/business-news/1261883/king-hints-at-interest-rate-increase.thtml

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