Bank of England hawk puts pressure on MPC not to ‘dally’ over raising interest rates

Bank of England hawk Ian McCafferty on Tuesday said he was in no mood to “dally” over interest rate rises, fuelling further expectations of another move within weeks.

The ratesetter, who voted for dearer money in March, is concerned about signs of accelerating wage growth potentially adding to inflation pressure. “We shouldn’t dally when it comes to tightening policy modestly,” he said.

A May rate rise — virtually pencilled in by financial markets — would take borrowing costs to 0.75%, the highest level since 2009, and increasing the monthly bills of millions of homeowners with tracker mortgages.

McCafferty even said there had been a case for following up November’s rate move with another hike as early as February. However, he held fire to avoid surprising households expecting “limited and gradual” rises in interest rates. The Bank will publish its rates decision on May 10. McCafferty’s colleague, Gertjan Vlieghe, recently said he expected rates to rise by between 0.25 and 0.50 percentage points a year for the next three years, taking rates above 2%.