Bank of England officials Jan Vlieghe and Ian McCafferty back rates to rise further

Bank of England officials today continued to signal a likely rate rise in the coming months, reiterating the hawkish message sent last week.

Jan Vlieghe, who is often seen as one of the more dovish members of the rate-setting monetary policy committee (MPC), said further interest rate hikes were likely, following the first increase in a decade in November.

His MPC colleague, Ian McCafferty, said “interest rates will have to go up gradually”, speaking on LBC radio.

Read more: Brexit lurks behind the Bank of England’s sudden hawkishness

The MPC on Thursday said stronger global growth and higher inflationary pressures mean it will likely have to raise rates “somewhat earlier and by a somewhat greater extent” than previously anticipated.

It also signalled that three hikes over the course of the next three years would not be enough to push inflation to within one percentage point of its target, two per cent annually.

The Bank thinks it will have to raise rates a “bit more” than three times to keep inflation down, Vlieghe said during a discussion on household debt at the Resolution Foundation, a think tank.

Read more: BoE chief economist: “No rush” for interest rate rise

“I really am seeing more and more evidence that the tightness of the labour market is at last having some upward effect on wages,” he added. “A further rise in interest rates is likely to be appropriate if all those trends continue and we are on a trajectory. It wasn’t just one hike in November and then we take a very long break.”

Vlieghe’s comments mean four of the nine MPC members have now backed up the message that rate rises are coming. Deputy governor Ben Broadbent said two rate rises within a year would not be a “great shock”, although chief economist Andy Haldane cautioned that there was “no rush” to hike.

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