Chairman of the Shadow Monetary Policy Committee and IEA Economics Fellow Andrew Lilico responded to the Bank of England Monetary Policy Committee's decision to raise the Bank Rate to three per cent
A 0.75 per cent rise in Bank Rate is about right in current circumstances. The Bank needs to keep pace with international rate rises and some normalisation in rates will be healthy for the long-term growth of the economy. But monetary growth is quite low so inflation should return to target in due course without a need for rates to rise more than a little further.
We should anticipate more rises to come but the Bank will need to manage down expectations about the peak, so as not to lurch from policy that was too loose in 2021 to policy that was too tight in 2023.
Notes to editors
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Shadow Monetary Policy Committee minutes: October 2022