Central Bank of the United Kingdom Pear: current interest rate hikes may avoid more radical austerity measures in the future

On 4 September, the Chief Economist of the British Central Bank, Hugh Pier, stated that the now higher interest rates would help to reduce the likelihood that the Bank would have to take more radical measures in the future to contain the inflation driven by the war in Iran. According to Pierre, “an increase in bank interest rates does not necessarily mean the start of a long and radical interest-rate cycle. If policies are properly implemented and communicated, timely increases in bank interest rates will help to guard against potentially harmful `catch-up' nominal dynamics and to avoid a temporary deviation of inflation from the target to become more durable.” Pierre and two other members of the Monetary Policy Committee voted in July in favour of the increase. On Thursday, interest-rate futures investors argued that the rate increase of 25 basis points at the meeting of the Monetary Policy Committee this month was slightly higher than 15 per cent, while the rate increase at the November meeting rose to more than 70 per cent。