BOE needs to be more robust to tackle rising inflation – UK Times

The rate of consumer prices inflation measured by the CPI is now 9 percent — four-and-a-half times the official target rate of 2 percent. The Bank of England is forecasting that CPI inflation will reach double-digit levels by the end of the year.

The expectations of the general public about future price rises are already shifting upwards. The latest Citi/YouGov survey, released just a few days ago, shows that inflation expectations for the next 12 months are more than 6 percent, and for the next five to ten years more than 4 percent. 

Another factor pointing to the need for tighter UK monetary policy is the evidence from the housing market, where property prices have been rising at about 10 percent or more for some time. 

In addition, the inflation surge we face is a cocktail of many influences. Some of these — tight labor markets, widespread price increases and high price expectations — threaten to prolong high inflation for a number of years. 

All this points to the need for more robust action by the Bank, and other central banks, in raising interest rates over this summer, and beyond.

If I were a member of the MPC now, I would be looking to raise the official UK interest rate to at least 2 percent by the autumn and to about 3 percent by next spring.