BoE's McCafferty urges rate hike to avoid inflation overshoot -Times of London

Sept 24 (Reuters) - The Bank of England should start raising interest rates now to prevent inflation overshooting in two to three years' time, a scenario that could mean interest rates would need to be jacked up sharply, a policymaker said on Thursday.

Ian McCafferty, currently the only member of the Monetary Policy Committee voting to hike interest rates from their record low 0.5 percent, said the direct impact on Britain from an emerging market slowdown should not be overstated.

"If we do not act soon, we run the risk of swapping the current period of very low inflation for one in two to three years' time in which inflation will overshoot our 2 per cent target more persistently, requiring interest rates to rise more sharply in response," McCafferty said in an opinion piece published by the Times of London newspaper. (http://thetim.es/1OVZzRv)

Other members of the MPC (KOSDAQ: 050540.KQ - news) take a different view. Deputy Governor Ben Broadbent told Reuters this week he had not been on the brink of voting for higher interest rates, adding that labour costs in Britain need to grow quite a lot faster to get inflation back to the BoE's 2 percent target. (Reporting by Andy Bruce in London and Ismail Shakil in Bengaluru; Editing by Christian Plumb)