Interest rates 'must go up next week'

The deputy governor of the Bank of England has said that interest rates are too low and should be raised next week.

With the Bank set to decide on whether or not to raise rates to 5.75 per cent at its monthly meeting next Thursday, deputy governor Sir John Gieve has revealed that he voted for rates to rise earlier this month.

Sir John was joined by three other members of the Monetary Policy Committee (MPC), but found himself outvoted by five to four.

Explaining his reasoning, Sir John noted that credit growth and demand may continue to grow if rates were not raised still further.

"I voted for a further increase earlier this month partly because I was not convinced that current rates would be sufficient to bring credit growth and nominal demand back to their long-term sustainable path," Sir John advised.

"I also felt that the impact of moving too slowly on the credibility of the regime and thus the future prospects for the economy was of greater concern, given the robust rate of growth, than an unnecessary slowdown in activity," he added.


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