Copy of 2023-04-13T104939Z_171295955_RC2KZZ9R044L_RTRMADP_3_BRITAIN-BOE-CREDIT-1682156147258
Investors quickly raised bets on the BOE hiking again in May from the current base rate of 4.25%. Image Credit: REUTERS

London: Bank of England Deputy Governor Dave Ramsden sees a risk that inflation will persist in the UK and said officials must not get “knocked off course” in their effort to keep a lid on prices.

The comments in an interview with the Times newspaper add to speculation the central bank will raise interest rates again at its next meeting on May 11.

Ramsden is the most senior BOE official to comment since consumer price data surprised by remaining in double digits for a seventh month. He said he’s concerned about the strength of food prices, which soared at the strongest pace in more than four decades.

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“When I look at where inflation is and where it needs to get to, I’m more focused on making sure that (we) stay the course in terms of the monetary policy decisions needed to get inflation back to target,” Ramsden said, according to the Times. High inflation, he said, “is a bigger risk than over-tightening.”

Those comments appear to answer remarks fellow policy maker Silvana Tenreyro made Thursday night, when she said rates are already too high for the UK economy to withstand. Tenreyro has been voting for no change in rates since late last year, while Ramsden and the rest of the panel voted for hikes.

Investors quickly raised bets on the BOE hiking again in May from the current base rate of 4.25 per cent. They’re now almost fully pricing in 5 per cent by September.

Ramsden indicated he’s still more concerned about soaring prices than the health of the economy.

“For seven months now, inflation has been in double digits,” he said in the interview. “We need to make sure that an inflationary mentality doesn’t develop in the economy as we’ve seen in previous periods. That kind of instability isn’t good and doesn’t give you the certainty that is the foundation for investment and growth.”

He said that “my approach will be all about staying the course to get inflation back down from its very high levels.”