Bank official warns of anticipated interest rate hike as Kraft Heinz raises prices | Interest rate
A Bank of England policymaker has warned households to prepare for an interest rate hike “much sooner” as inflationary pressures intensify, and Kraft Heinz has become the latest company to announce that prices food will increase.
Michael Saunders, one of the bank’s nine rate setters, said investors were right to bet on faster increases in borrowing costs with consumer price inflation on the way to surpass 4%, adding to signs that Threadneedle Street could become the first major central bank to raise rates since the start of the coronavirus pandemic.
“I am not in favor of using passwords or stating our intentions too clearly before the meeting. Decisions are made at the right time, ”Saunders said in an interview with The Telegraph. “But the markets have incorporated in the last few months a hike in the bank rate earlier than before and I think that’s appropriate.”
His comments come as households face rising energy bills and the prospect of rising food prices. The boss of Kraft Heinz said on Sunday that the company, ketchup and bean maker Heinz, was raising prices in several countries.
“We are raising prices, if necessary, around the world,” Miguel Patricio told the BBC, adding that there were a number of reasons behind the increases.
“Specifically in the UK, with the lack of truck drivers. In [the] In the United States, logistics costs have also increased significantly and there is a labor shortage in some areas of the economy, ”he said.
Iceland, the UK’s frozen food chain, recently warned that “price hikes are inevitable”, while Tesco and the cooperative are among the food retailers to have given similar warnings.
The Bank of England’s Monetary Policy Committee last month voted unanimously to keep rates at 0.1%, an all-time low, despite annual inflation of 3.2%, the highest level for over nine years and above the Bank’s 2% target.
However, Saunders and Dave Ramsden, a deputy governor, voted to lower the limit on the central bank’s £ 895 billion quantitative easing program by £ 35bn.
Saunders said markets fully integrated a February rate hike by the UK central bank and incorporated half of an increase in borrowing costs in December.
“I’m not trying to comment on which exactly, but I think it’s appropriate that the markets have taken a much earlier tightening path than before,” he said.
Saunders’ comments came shortly after Bank of England Governor Andrew Bailey said inflation exceeding the central bank’s 2% target was of concern and should be managed to prevent it. to anchor itself permanently.
“We’re going to have a very delicate and difficult job to do, so we have to in a way prevent this from taking root permanently because that would obviously be very damaging,” Bailey told the Yorkshire Post.