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| Bank of England member warns of low interest rates risk | Bank of England member warns of low interest rates risk |
| (about 7 hours later) | |
| Waiting too long to raise interest rates risks undermining the UK's recovery, Bank of England policymaker Kristin Forbes has warned. | Waiting too long to raise interest rates risks undermining the UK's recovery, Bank of England policymaker Kristin Forbes has warned. |
| Monetary Policy Committee member Ms Forbes said a rate hike took between one and two years to take full effect. | Monetary Policy Committee member Ms Forbes said a rate hike took between one and two years to take full effect. |
| As a result, rates would need to rise "well before" inflation hit the Bank's 2% target, she said. | As a result, rates would need to rise "well before" inflation hit the Bank's 2% target, she said. |
| Her comments, in a column in The Telegraph, suggest interest rates could rise sooner than currently expected. | Her comments, in a column in The Telegraph, suggest interest rates could rise sooner than currently expected. |
| "Waiting too long would risk undermining the recovery - especially if interest rates then need to be increased faster than the gradual path which we expect," she warned. | "Waiting too long would risk undermining the recovery - especially if interest rates then need to be increased faster than the gradual path which we expect," she warned. |
| 'Bit more time' | 'Bit more time' |
| Ms Forbes, who joined the nine-strong MPC committee responsible for setting interest rates in July last year, said keeping interest rates at their current historic low of 0.5% risks "creating distortions". | Ms Forbes, who joined the nine-strong MPC committee responsible for setting interest rates in July last year, said keeping interest rates at their current historic low of 0.5% risks "creating distortions". |
| But she said that the pound's continuing strength, together with recent falls in energy and commodity prices, would keep inflation low for longer, and gave the MPC "a bit more time". | But she said that the pound's continuing strength, together with recent falls in energy and commodity prices, would keep inflation low for longer, and gave the MPC "a bit more time". |
| "There is no need to act before we are confident that inflation is heading back toward 2% within about two years as expected," she added. | "There is no need to act before we are confident that inflation is heading back toward 2% within about two years as expected," she added. |
| Her comments come less than a week after fellow MPC member David Miles said said there were arguments for starting "the journey now" towards a rate hike. | Her comments come less than a week after fellow MPC member David Miles said said there were arguments for starting "the journey now" towards a rate hike. |
| Gradual increase | Gradual increase |
| Earlier this month, MPC members voted 8-1 to keep rates on hold - the first time for months the decision has not been unanimous, and together with the comments from Mr Miles and Ms Forbes - suggest that the balance is shifting. | Earlier this month, MPC members voted 8-1 to keep rates on hold - the first time for months the decision has not been unanimous, and together with the comments from Mr Miles and Ms Forbes - suggest that the balance is shifting. |
| Bank of England governor Mark Carney has said that when rates start to rise, they will do so only gradually. | Bank of England governor Mark Carney has said that when rates start to rise, they will do so only gradually. |
| At a news conference last month he said the timing for a Bank rate increase is "drawing closer", but cannot "be predicted in advance". The decision would be determined by looking at economic data, he added, including wage growth, productivity and import figures. | At a news conference last month he said the timing for a Bank rate increase is "drawing closer", but cannot "be predicted in advance". The decision would be determined by looking at economic data, he added, including wage growth, productivity and import figures. |
| Several economists interpreted Mr Carney's comments, and information in the Bank's recent Inflation Report, as a signal that any rate rise was likely to be put back from the end of this year until early 2016. | Several economists interpreted Mr Carney's comments, and information in the Bank's recent Inflation Report, as a signal that any rate rise was likely to be put back from the end of this year until early 2016. |
| 'Stay vigilant' | 'Stay vigilant' |
| Ms Forbes said it was not possible to predict an exact date for an interest rate hike, and that the MPC would first require more evidence that inflation was heading towards its 2% target. | Ms Forbes said it was not possible to predict an exact date for an interest rate hike, and that the MPC would first require more evidence that inflation was heading towards its 2% target. |
| Comparing the risks to the economy to the dangers of sunburn in hot weather, she warned it was important to avoid the temptation to stay outside all day. | Comparing the risks to the economy to the dangers of sunburn in hot weather, she warned it was important to avoid the temptation to stay outside all day. |
| "Linger too long in the sun and your skin may take on a slightly pink glow". | "Linger too long in the sun and your skin may take on a slightly pink glow". |
| "Enjoy the sunshine and low inflation this holiday season. But remember that neither are likely to persist. Stay vigilant against sunburn," she wrote. | "Enjoy the sunshine and low inflation this holiday season. But remember that neither are likely to persist. Stay vigilant against sunburn," she wrote. |
| How would you be affected by an interest rate rise? You can get in touch by emailing haveyoursay@bbc.co.uk with your comments. | |
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