Interest rates will rise ‘pretty soon’, says outgoing Monetary Policy Committee member David Miles

Outgoing Bank of England Monetary Policy Committee Member David Miles.

Outgoing Bank of England Monetary Policy Committee Member David Miles. - Credit: PA

Outgoing Bank of England policymaker David Miles said interest rates are set to rise “pretty soon” as growth in Britain’s economy picks up pace.

Mr Miles, who cast his final vote as a member of the Monetary Policy Committee (MPC) earlier this month, told BBC Newsnight the time to lift rates from the record low of 0.5% was drawing closer.

Asked when the first rise would be, he said: “I think it’s pretty soon, and I don’t think it’s anything to worry about - it’s a sign the economy is returning to a more normal position.”

He added: “It’s taken a long time to get there, and we’re not fully there yet.”

His comments provide the latest sign that rates will soon edge higher, coming days after fellow MPC member Kristin Forbes warned of the dangers of “lingering too long in the sun” with low interest rates.

She said that waiting too long for an increase risked undermining the recovery.

Ms Forbes said it was tempting to put off any increase while enjoying the flat cost of living, higher wages and strong economic growth, but compared this to the dangers of sunbathing.

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The MPC voted 8-1 to keep rates on hold earlier this month at 0.5%, where they have remained for more than six years.

A single dissenter, Ian McCafferty, voted to raise rates to 0.75%, in the first split vote since the end of last year, although experts had been expecting two or more policymakers to call for a hike.

Mr Miles, who is leaving the MPC after more than six years on the rate-setting committee, said he was optimistic about the UK economy.

He said: “Within the UK economy, consumer confidence is strong, corporate confidence is pretty strong and the financial system is operating near normal now.”

Bank governor Mark Carney said earlier this month that the likely timing of a rate hike was “drawing closer”, although the Bank dampened expectations that it could come as soon as this year.