Alan Taylor, a member of the Monetary Policy Committee of the Bank of England, said on Tuesday that there is not yet sufficient justification for raising interest rates—until high energy prices show clearer signs of spreading inflation into the wider economy.
Taylor, who earlier this month voted to keep rates unchanged, noted that a recent spike in gas and oil prices «could significantly lift the overall inflation reading over the winter».
According to him, this alone is not enough to raise rates, and evidence of secondary inflation effects is «extremely scarce»: inflation in the food sector turned out to be below expectations, and growth in base wages still matches the targeted inflation rate.
«The case for further rate hikes doesn’t seem convincing to me unless energy prices remain high for a prolonged period and send clearer signals that inflationary pressure is feeding into broader, more sustainable inflation,» he said during a lecture at the National Institute of Economic and Social Research in the UK.
Taylor joined the majority of 6 votes to 3, which voted to keep the policy rate at 3.75% earlier this month. In the minutes of the rate-setting meeting, he said he would like to see «clear evidence that the secondary effects are already on the way» before raising interest rates.