Another Bank of England employee on the Monetary Policy Committee warns that there will be a forthcoming 'hike' in interest rates over the next few months.

David Miles, is the latest member to come public about forthcoming increases after MPC's Ian McCafferty and the Bank of England's new chief economist both voiced the opinion. Miles believes the market and economy's recovery as "resilient" and "sustainable"  and that is why it is more than likely that interest rates will rise.

Earlier this month, governor Mark Carney said rates were set to rise "sooner than expected".
In an article that he wrote for the Sunday Telegraph, Miles was very positive about the rate increase and it would benefit the economy.

He said “Having bank rate at 0.5% is obviously not a normal or sustainable setting for monetary policy.

“We have had such low rates because the economy took a huge hit in the aftermath of the financial crisis of 2008.

"Until fairly recently we have not had any sort of sustained recovery from that. Now we have one.”

 

He also wrote that low inflation would allow a slow increase in interest rather than adapting Miles said “eye-wateringly sharp” increases introduced in the 70's and 80's, when the Treasury attempted to try and keep house prices down by bulldozing through a programme of concerted rate increases.

"This is more a case of scaling back the emergency medicine as the patient begins their recovery, rather than invasive surgery to deal with a sudden, life-threatening illness,” he said.

 

However Miles did concede that because there was overall a low level of wage increases then there was enough leeway for the Bank of England to hold rates for the immediate future.

The market is now predicting that the increase will not occur until November this year, coinciding with the Inflation Report. He quashed rumours that it was “wildly unlikely” that interest rates would return to the 5% rate before the economy crisis.