BoE’s Forbes – Weakness in sterling supports case for UK rate increase

British pound

Kristin Forbes, policymaker of the Bank of England, said she was worried the pound’s weakness would have a lasting upward effect on inflation, and she was concerned central banks were becoming more reluctant to increase interest rates in the past.

The three-year term of Forbes on the Bank of England’s Monetary Policy Committee will end this month, and she has voted to increase the interest rates from their record-low 0.25 percent ever since March of this year.

"'Lift-off' of UK interest rates should not be delayed any longer," Kristin said in a speech to be given at the London Business School. "Sterling's depreciation has fundamentally shifted underlying inflation dynamics in a way that makes it more pressing to begin this voyage soon."

The comments by Forbes come after a rough seven days which have seen a big divide emerge on the MPC at a time when inflation is picking up but growth prospects are unclear as the country gets ready to depart from the European Union.

In an unexpected move, two other policy makers joined Forbes the previous week in voting for higher interest rates, and the chief economist of the Bank of England said he’s likely to do so later in the year once the “dust cloud” around the political outlook of Britain has cleared.

The pound touched $1.2685 prior to moving to $1.2676, up 0.08 percent on the day, while the euro went down 87.82 pence before going up 87.92 pence, down 0.2 percent from late on Wednesday.

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