Economist highlights controversial way Bank of England can ease inflation

• A former Bank of England official, Michael Saunders, has warned that interest rates may need to rise this year to control inflation.
• This is attributed to spiralling food and fuel costs, exacerbated by the Iran war, which could push inflation to 4.5 per cent from its current 3 per cent.
• Mr Saunders, a former member of the Monetary Policy Committee, suggests it would be less costly to increase rates now than to risk uncontrolled inflation later.
• The warning comes as the Bank's MPC had previously indicated a desire to cut rates before the conflict, and mortgage rates have already increased significantly.
• This outlook is a blow to borrowers hoping for cheaper mortgages, though another economist suggests the Bank might talk tough without necessarily hiking rates unless inflation exceeds 4 per cent.

IN FULL

Bank of England should increase interest rates to head off inflation, warns top economist