LONDON (Reuters) - Consumer spending will probably slow after five interest rate hikes in a year but it is hard to say how quickly that will happen, Bank of England Monetary Policy Committee member Timothy Besley said on Thursday.
The policymaker, considered an arch-hawk since he joined the rate-setting committee last year, said he had been pushing for higher rates because of evidence the global economy was strong, money and credit were rising rapidly, firms wanted to put up prices and there was limited spare capacity.
“My apparent desire to raise rates, perhaps more quickly than some of my colleagues on the MPC, has been fuelled by a belief that we would be better placed to bring inflation to target in the medium term by doing more sooner,” he said in a speech.
“Moreover, the peak of rates may eventually be lower by moving earlier.”
The Bank raised interest rates this month to a 6-year high of 5.75 percent but financial markets are predicting another rise in the next few months.
But there was little in Besley’s speech to suggest that he was gunning for another rise next month though many of the indicators he cited that justified tighter policy are still running strong.
He did also dismiss the slowing in retail sales growth seen in data published earlier on Thursday.
“I do not put much weight on the month-on-month variation. This is too easily influenced by weather and other idiosyncratic events,” he said.
Official data earlier showed sales volumes rose 0.2 percent in June but wet weather had pushed down demand for summer food and drink.
The MPC was split 6-3 this month on its decision to raise interest rates with some like Besley clearly wanting an immediate quarter-point rise.
But others like Deputy Governor Rachel Lomax argued that there was time to wait and see how the economy was reacting to previous hikes.
In a question and answer session after the speech, Besley said policymaker had to be forward-looking and could not just rely on the trends in the data.