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Pound hits fresh high on rate rise speech from Bank official

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    Bank of EnglandImage copyright PA

    The pound hit a 15-month high against the dollar after a senior Bank of England official fuelled speculation it could raise rates in the coming months.

    Gertjan Vlieghe, who is on the Bank’s Monetary Policy Committee, said the “moment is approaching” when interest rates might need to go up.

    It comes after the Bank voted on Thursday to keep rates at 0.25%, but talked in stronger terms about a rise.

    Mr Vlieghe has previously argued against increasing interest rates.

    Sterling rose more than 1% against the dollar to hit $1.3590, its highest since June last year.

    The pound also gained 0.9% against the euro to rise above 1.13 euros.

    Pay pressure

    In a speech on Friday, Mr Vlieghe said: “Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure.

    “But the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise.”

    He pointed to unemployment falling to record lows, as well as signs that households are spending more and that wages are rising in the private sector.

    “If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in Bank Rate might be as early as in the coming months,” Mr Vlieghe said.

    View the original article:

    The Bank’s rate rise hint on Thursday had already pushed the pound up against other currencies, as higher interest rates would make sterling more attractive to investors.

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