Two of the nine members of the Bank of England 's monetary policy committee said they would rather wait and see how soaring gas prices and commodity shortages are affecting the economy. inflation before voting for an increase in borrowing costs.
In a post that will be seen as a blow to more hawkish committee membersMonetary Policy Committee (MPC), who signaled their willingness to increase borrowing costs, economists said the recovery was still uncertain.
Catherine Mann, a former chief economist at the Organization for Economic Co-operation and Development and US Bank Citi, said the central bank might not raise interest rates because financial market traders were doing part of her job for her by betting on tightening monetary policy in Britain and the United States.
She said speculation about the BoE's intentions was raising the cost of borrowing in financial markets, which a rate hike would be designed to do.
"They see that the normalization of monetary policy is the direction of the journey… and so they do their homework and they start to think.value in that direction of travel, "Mann said in an online discussion hosted by the Euro50 group, which debates European economic and financial policy issues.
Silvana Tenreyro , who sits in the MPC with Mann, also spoke out against an anticipated rate hike, saying a higher push could be "destructive" if inflationary pressures turn out to be temporary.
While on a virtual trip to Wales, Tenreyro argued that the current level of inflation was measured against low prices. 'last year the day after the first confinement.
The old London School of Economy The professor said that large increases in the global price of energy and other commodities also push up inflation, "but these effects in general tend to be short-lived ".
Speaking to BusinessLive Wales, Tenreyro said: “Prices are going up, but they don't keep going up in a sustainable way, so you have a one-time price effect and, in this sense, inflation should be transient.
"At the time when interest rates had a major effect on inflation , the effects of energy prices would have already disappeared from the inflation calculation. If certain effects were to prove to be more persistent, it would be important to balance the risks of a period of above-target inflation with the cost of lower demand, ”he said. -she added.
Many investors are betting that the BoE will raise interest rates before the end ofel year, becoming the first major central bank to do so since the onset of the coronavirus pandemic.
Last week the Governor of the Bank, Andrew Bailey , said he was concerned about inflation exceeding the central bank 's 2% target and "very damaging " effect if consumers and businesses thought it had become definitely high.
Another MPC member, Michael Saunders, stated that it was appropriate that the financial markets are focusing on a rate hike before Christmas, adding to speculation that Threadneedle Stre and may hike rates.
Bank officials are concerned thatA long period of above target inflation would trigger a series of wage increases that would force companies to raise the prices of goods and services further.