Michael Saunders, a member of the Monetary Policy Committee of the Bank of England, said interest rates should be raised gradually and that there should be no acceleration in that move at a time of growing domestic inflationary pressures. Saunders voted in favor of a rate hike at the last meeting.
Earlier in the day, markets discounted the chances of a rates hike at a meeting next month, following remarks by Mark Carney, governor of the Bank of England, that recent economic data were mixed and noted differences of opinion within the MPC.
Saunders said he believed inflationary pressures from the labor market were likely to be stronger than the Bank of England forecast in February and the economy would grow by about 1.5-2% on yearly basis in the next two years slightly higher than expected.
He said that the gradual increase of interest does not mean that MPC raise rates at a very slow frequency, nor does it mean that the MPC cannot tighten monetary policy at a faster pace than market price in, adding that interest should return to normal and neutral levels, Its estimate is about 2% despite the uncertainty.
