Former Bank of England deputy urges interest rate hike

Former Bank of England deputy governor Sir John Gieve has said there is a “very strong case” for increasing interest rates as officials vote on the direction of monetary policy today.

Gieve, speaking at an event organised by Fathom Consulting yesterday, said that Brexit had not caused a sharp hit to the UK economy, and the uncertainty over future trading relationship was not enough reason of itself to keep the base rate so low.

The Telegraph quotes Gieve as saying: “I think there is a very strong case for reversing the quarter percentage point cut from last year. The rationale behind that was there was a risk that the shock of the vote would drive [demand] down excessively in the short term and the Bank tried to prevent that.

“Perhaps they did, perhaps it wasn’t necessary. But either way there hasn’t been a shock to demand.”

He also said that the Bank could begin to roll back its bond buying activities.

The Bank has become more divided after a period of near-unanimity over low rates, but many expect it to keep them on hold for today’s meeting.