INTEREST RATE DILEMMA

SILVANA Tenreyro, a member of the Bank of England’s Monetary Policy Committee, has said interest rates would need to rise to 8pc to bring inflation back to target this year.

The Bank has been under fire for not raising rates sooner to fight double-digit inflation, which is way above its official 2pc target. Rates have gone from 0.1pc to 4pc since December 2021.

She said raising rates too far would hit the economy, with unemployment rising around 1m. Analysts said her comments highlighted the dilemma the Bank faces in controlling inflation without crashing the economy.