Dangers of hiking interest rates too soon | This is Money

Dangers of hiking interest rates too soon | This is Money

The Bank of England should resist hiking interest rates as long as it can, says Vicky Pryce, economist and senior managing director of business advisory firm FTI Consulting.

Inflation is coming up the political agenda. The surprise fall in output last quarter, albeit mostly due to bad weather, has revived memories of 'stagflation', the combination of stagnant growth and rising inflation experienced in the 1970s.
The Bank of England's inactivity in this area, despite inflation being above its 2% target for over a year, has started to raise issues about its credibility.

Should the Bank start raising interest rates rapidly to compensate? My view is that it should carry on doing what it is doing now, in other words nothing much at all, for as long as it feels it can resist these pressures.