Bank of England Governor Sir Edward George has issued a stark warning that the British central bank would have 'no option' but to hike interest rates if domestic demand growth did not slow.
Speaking to a parliamentary committee today, George said: 'If it doesn't happen that domestic demand slows, and the external situation picks up, that's when it would generate inflationary pressure. At some point we will have to moderate the rate of growth of domestic demand.'
The BoE's Monetary Policy Committee last year slashed interest rates to a 38-year low of 4% in a bid to head off the effects of a global economic slowdown.
But with consumer spending booming and industrial output recovering in line with the world economy, economists expect the MPC to begin hiking rates, possibly as soon as next month.
