Bank of England Inflation hawk, Andrew Sentance has warned that interest rates need to be upped in order to keep inflation at bay. The bank’s Inflation Report that is to be issued shortly is believed to show inflation figures still well above the target of 2% of biannual inflation. Interest rate is currently fixed at 0.5%.

Since the Great Britain’s GDP is only growing at a slow pace of 0.5% the past quarter, bank officials are still reluctant to raise interest rates again. Economic growth is also still 4% behind its peak from there years ago, which is a further discouragement for officials to vote for a raised interest rate in the bank’s MPC meeting in May.

The strain on household incomes is not benefiting economic growth either as figures are expected to fall again later this year and households are not noticing the slight recovery. Therefore the seasonally boost the economy will experience in the sectors retail and tourism in Q2 will likely be outweighed by the loss of revenue during the Easter Holidays, Bank Holidays and the Royal Wedding.

"People may begin to conclude from that, that there is some question mark over the commitment of the Bank of England to the inflation target", said Sentence.

Even if the bank officials decide to keep interest fixed in the next quarter, it is likely that interest rates will rise again later in the year.