MPC Member Says Interest Rates Likely To Rise Next Spring

A leading Bank of England policymaker has said the base rate is likely to rise in “spring 2015” in unusually revealing comments made this afternoon. Martin Weale, one of the Bank’s nine Monetary Policy Committee (MPC) members, said to Sky News families and businesses should prepare for a rate hike that may come before the general election, scheduled for 7 May 2015. That follows the Bank’s latest inflation report, issued earlier this month, which said the BoE will not increase rates “for some time”, and predicted the base rate would stand at 2% by 2017. Though the eight other members of the committee may disagree with him, Weale’s comments appear to offer clear guidance on when borrowing costs in the UK can be expected to rise from their current all-time low of 0.5%. He told Sky News: “I think it is very helpful if we try and explain that the most likely path for interest rates is that the first rise will come perhaps in the spring of next year. And then the path is likely to be relatively gradual.” However, if average earnings rise more quickly than expected, Weale does not rule out the possibility of a rate hike at an earlier stage. Yet he does not see rates rising anywhere near the 5% mark, considered normal in the past, in the foreseeable future.