Maintaining high interest rates for too long could hit jobs and drag inflation below target levels, a deputy governor of the Bank of England has warned.<\/p>\n
Sarah Breeden, the Bank\u2019s deputy governor for financial stability, said economic output could also be affected.<\/p>\n
In a speech to Cardiff Business School, she said: \u201cHolding policy too tight for too long comes with costs to output and employment, which could then pull inflation below target.\u201d<\/p>\n
Policymakers at the central bank voted to hold interest rates at 4% earlier this month.<\/p>\n
The deputy governor was among members of the nine-strong committee to vote in favour of the hold.<\/p>\n
Expectations for a cut in the coming months have also recently cooled amid concerns over rising inflation.<\/p>\n
Rate-setters at central banks typically keep interest rates \u2013 which affect borrowing costs for mortgages and other loans \u2013 at elevated levels in order to bring down inflation.<\/p>\n
Ms Breeden said on Tuesday that inflation is \u201ctoo high\u201d, amid forecasts that it will increase to a peak of 4% this month.<\/p>\n
However, the Bank of England has predicted that it will then steadily decline amid efforts to bring it back to the 2% target rate set by the Government and the Bank.<\/p>\n
Ms Breeden said she believes the current uptick in inflation, which has been partly driven by higher food costs, is a \u201chump\u201d which should ease.<\/p>\n
\u201cI do not see evidence that the disinflation process is veering off track,\u201d she said.<\/p>\n
\u201cInstead it remains my central case that the \u2018hump\u2019 will prove just a bump in the road.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Maintaining high interest rates for too long could hit jobs and drag inflation below target levels, a deputy…\n","protected":false},"author":2,"featured_media":172139,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[3490,84,77272,77273,1294,1431,814,77271,29133,56,54,55],"class_list":["post-172138","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bank-of-england","tag-business","tag-cardiff-business-school","tag-deputy-governor","tag-economy","tag-inflation","tag-interest-rates","tag-sarah-breeden","tag-target","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/172138","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=172138"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/172138\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/172139"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=172138"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=172138"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=172138"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}