The Bank of England's monetary policy committee is underestimating global inflationary pressures and UK inflation is likely to be higher over the next two years than the central bank expects, a top central bank official said on Thursday.
Andrew Sentance, the policyhawk of the MPC, insisted that an immediate hike in interest rates is necessary to strengthen the value of the pound and rein in import prices.
Speaking at a conference in London, Sentance questioned the need for emergency monetary policy settings at a time when inflation is soaring.
"We face a very different balance of risks to inflation in the medium-term from the one we faced in the spring and summer of 2009," he said.
"We now find ourselves in a different world - one of relatively strong global demand and global inflationary pressures.
"In my view, these upward pressures on global demand and prices are not about to abate quickly and are one of the key reasons why I would expect UK inflation in the medium-term to be higher than the latest Inflation Report forecast suggests."
The Bank of England expects inflation to remain above its 2% target well into 2012, but has blamed rising prices on various temporary factors.
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