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Andrew Sentance again calls for interest rate rise

Andrew Sentance has again gone public on his call for an increase in UK base rates to offset the ever-growing threat of inflation, which remains stubbornly high. This is one member of the MPC committee who has repeatedly highlighted the threat of inflation and the potential problems in the future if this issue is ignored in favour of straightforward fiscal stimulus programs. But why does Andrew Sentance feel so strongly about UK base rate?

There is a growing debate as to whether the Bank of England's refusal to attack inflation in the short to medium term, despite the fact it remains uncomfortably high, could impact upon the Bank's long-term reputation and ability to rein in prices. However, finding a balance between increasing interest rates, attacking inflation and also injecting confidence back into the economy is a very difficult balancing act the likes of which the Bank of England and the MPC has never seen before.

Over the last few months there has been a definite split in the MPC and despite the fact that UK base rates remain at 0.5% there is still great conflict within the confines of the Bank of England. If inflation is left unattended for a prolonged period of time, while the Bank of England looks to inject confidence and capital into the UK economy, what damage will have been done by the time the UK economy is able to stand on its own 2 feet?

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