A Bank of England’s senior official has ‘threatened’ the base rate could increase to 2.0 per cent and possibly more over the next twelve months.

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The senior figure, Michael Sanders, a member of the Bank’s Monetary Policy Committee threatens the rise is no longer “unlikely” nor “implausible”.

In a debate organised by organised by the Resolution Foundation think-tank he told attendees: “The precise path of future monetary policy is, of course, inherently uncertain, because it will depend on future economic developments that cannot yet be foreseen. But I note that the BoE market participants’ survey and the Treasury’s survey of external forecasters both suggest that Bank Rate will rise to around 2.0 per cent in the next year.

“Market pricing is even higher. Neither the external consensus nor the path of inflation break-evens implies that such a rate path will leave inflation below target over time. Without wishing to endorse those views too strongly, I do not regard such an outcome – that is, that Bank Rate will have to rise to 2.0 per cent or higher during the next year to return inflation to target – as implausible or unlikely.”

He added: “But, rather than focus on a precise forecast for Bank Rate over the next year, the key point is that the tightening cycle may, in my view, still have some way to go.”

There’s been a large month-on-month increase in the cost of typical buy to let fixed rate mortgages popular with landlords, thanks to rising interest rates .

As previously reported an online brokerage firm found that landlords are now having to pay an average £59 per month more in June, including fees, for a typical five year fixed rate mortgage, and from January landlords’ monthly mortgages have on average shot up by £174 per month.

In the B of E’s latest meeting of the Monetary Policy Committee, Saunders he had supported/voted for a 0.5 per cent point base rate increase which he and pro-colleagues lost as it was decided to raise the base rate by 0.25 per cent.

He says: “My own view is that further monetary tightening is likely, and indeed, as evident from my votes at the MPC’s recent policy meetings, my preference has been to tighten relatively quickly.

“This partly reflects my view that risks are tilted on the side of a more persistent period of excess demand and domestic inflation pressures than implied by the most recent monetary policy report forecast, published in early May. Despite the inflation-induced erosion of real incomes, I put more emphasis on risks that the backlog of unmet hiring needs and low labour supply will keep the labour market very tight. In turn, I expect that spending will be underpinned by low unemployment, the household and corporate savings accumulated during the pandemic, and the fiscal support measures announced in recent months.