Bond Vigilantes: Short-term rate hike too risky

M&G's bond vigilante Matthew Russell explains why inflation expectations should not influence the increasingly hawkish MPC on rate rises.

Yesterday, with the release of the MPC's latest minutes, we discovered a further member of the committee voted for a rate hike at the last meeting. Spencer Dale voted for an increase in the base rate of 25 basis points. That now leaves the votes: three to tighten, five to stay on hold and one to further loosen monetary policy (Adam Posen is still calling for more QE). The general tone of the minutes feels to me as though the committee in general is getting more hawkish and it is becoming more likely the base rate will be increased before too long. One of the factors the members of ...