One of the nine members of the Bank of England’s Monetary Policy Committee (MPC) – Professor David Miles, who will soon be leaving his role – has publically stated that interest rates will go up “pretty soon”.
In a BBC Newsnight appearance, he made it clear that the bank’s rate will be going up from the record low of 0.5 per cent in the near future, adding that: “I don’t think it’s anything to worry about, it’s a sign of health.”
Mr Miles has been a member of the MPC for over six years, and his recent statement comes after his last vote at the committee’s August meeting was to keep rates at the same level.
At the beginning of this month only one member of the MPC voted for a rate rise.
However, Mr Miles’s statement, when combined with warnings from Professor Kristin Forbes – another committee member – that delaying an interest rate rise will undermine the UK’s recovery, reveals that attitudes are changing.
The news also means that rates could be going up sooner than initially predicted by economists.
Professor Miles said: “Within the UK economy consumer confidence is strong, corporate confidence is pretty strong and the financial system is operating near normal now.”
He also made it clear that the new ‘normal’ level for interest rates is likely to be between 2.5 per cent and three per cent, which would still make it much lower than rates recorded before the financial crash when they were roughly double those figures.