LONDON: The Bank of England, faced with runaway inflation, must keep hiking interest rates regardless of the impact on the economy and the cost-of-living crisis, a BoE policymaker warned on Friday.

Dave Ramsden, a member of the central bank’s Monetary Policy Committee, also defended the BoE’s recent decision to snap up UK bonds and halt markets turmoil sparked by the UK’s tax-slashing budget.

“However difficult the consequences might be for the economy, the MPC must stay the course and set monetary policy to return inflation to achieve the 2.0-percent target,” Ramsden told a London securities conference.

The comments came after the BoE last month ramped up its key interest rate by a half-point to 2.25 percent.

Ramsden was in the minority calling for a larger 0.75-percentage-point hike. Rising rates dampen inflationary pressures — but they also push up loan repayments for consumers and companies alike, thereby exacerbating the UK’s cost-of-living crisis.

“We are acutely conscious that, for many, our monetary policy actions are adding to the difficulties caused by the current situation,” Ramsden added Friday.

The BoE, like central banks around the world, has hiked interest rates a number of times this year in a bid to cool decades-high inflation.

UK inflation eased in August to 9.9 percent after striking a 40-year peak of 10.1 percent in July.

Published in Dawn, October 8th, 2022