The top economist at the Bank of England has said interest rates will probably be higher in the long run than they were in the 2010s, but that they are likely to come down from current 15-year highs.
He said that as inflation comes closer to 2% – the target that the Government has set the MPC – rate setters will look for a new normal.He said he hoped the Bank can operate in future with fewer outside shocks – citing the pandemic and the economic impact of the war in Ukraine – which can allow it to set rates in a more stable environment.
“We’re targeting inflation at 2%. So, you need an interest rate of 2% to cover that. And then, you know, people put their money in the bank to save. They’re expecting some return on that.”
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