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‘Interest rates are still too low’ says Bank bigwig

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The UK’s interest rates are still low, according to the deputy governor of the Bank of England, Sir John Gieve.

At a speech in Guildford, Surrey, he explained the reasons behind his vote to increase the rate – he was one of four members of the Monetary Policy Committee (MPC) who did so at its June meeting – and said that future rises cannot be ruled out.

Indeed, many analysts are predicting that Base Rate will go up again next week to 5.75% after being held in June, which would be its highest level in six years as the Bank tries to curb inflation.

Sir John said: “One of the main forces behind the growth in prices has been the low cost of credit and debt, which has powered spending by consumers and businesses.

“I voted for a further increase earlier this month partly because I was not convinced that current rates would be sufficient to bring credit growth and nominal demand back to their long-term sustainable path.”

He continued: “I also felt that the impact of moving too slowly on the credibility of the regime, and thus the future prospects for the economy, was of greater concern, given the robust rate of growth, than an unnecessary slowdown in activity.”

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