Rate-setter warns inflation could rise faster than BoE thinks-Bloomberg


LONDON, June 19 (Reuters) - Bank of England rate-setter
Kristin Forbes, who steps down at the end of the month, said on
Monday that the central bank is running the risk of continued
underestimation of inflation pressure in Britain's economy.
    Forbes said in an interview with Bloomberg that rising
domestic cost pressures suggested there was a cost to waiting
further before hiking interest rates.
    She has voted for higher rates since March and last week two
other policymakers joined her in a shock split decision.
    "For a period now, we have been underestimating the
inflationary pressures -- I wouldn't be surprised if we
continued to do that," Forbes said.
    "The increase in headline inflation isn't just a temporary
effect of the exchange rate that's going to go away," the U.S.
academic added.
    British inflation unexpectedly jumped to 2.9 percent in May,
its highest level in nearly four years, tightening the squeeze
on consumers and complicating the job of the BoE, which has
signalled it is in no hurry to raise interest rates.
    The BoE said last week it expected inflation to top 3
percent in the second half of this year.
    Earlier on Monday, Britain's finance ministry named Silvana
Tenreyro, a trade-focused London School of Economics academic,
as Forbes' replacement as an external member of the BoE's
Monetary Policy Committee. [nL8N1JG2S1]

 (Reporting by Andy Bruce; Editing by William Schomberg)
 ((andy.bruce@thomsonreuters.com; +442075423484; Reuters
Messaging: andy.bruce.thomsonreuters.com@reuters.net))


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