British rates ‘may need to rise further’

BANK OF ENGLAND chief economist Charles Bean said interest rates may need to rise further as the economy picks up strength, though policymakers will move gradually and take time to consider the impact of their changes.

Speaking in an interview with Bloomberg News, Mr Bean said borrowing costs remain "stimulative" after the British central bank raised the benchmark lending rate a quarter percentage point to 3.75% earlier this month.

"We've had interest rates at historically low levels," said Mr Bean. "If growth stays above Britain's trend rate for any significant period, then further interest rate rises may be required. We'll take this one step at a time. We want to look at this cautiously and see how things pan out." The comments may restrain predictions for how quickly policymakers will increase interest rates in the coming months. Futures markets suggest the bank may raise its benchmark rate a full percentage point during the next year.