Prepare for higher rates, MPC's Saunders tells households

Prepare for higher interest rates, a top Bank of England policymaker told households.

Having confounded expectations for a sharper slowdown or contraction, the British economy did not need as much monetary stimulus as it was now receiving, the Monetary Policy Committee's Michael Saunders said in an interview with The Guardian.

Nonetheless, in his interview with the newspaper Saunders stressed that raising Bank Rate to 0.50% would still leave policy "pretty loose".

"If rates were to rise to 0.5%, policy would still be pretty loose. We would still be providing plenty of stimulus, continuing to support output and jobs," he said.

Among the reasons that led him to vote for a hike at the MPC's last policy meeting were a reduction in the pool of workers from overseas that was available - which might boost wages - and expectations for stronger exports and investment.

The latter, he said, would roughly offset the slowdown in household spending.

Over the past five years, the bulk of increased employment had come from people born outside of the UK.

And no, the ongoing Brexit negotiations would not hinder Bank's room for manouevre when deciding on policy.