Rates to rise soon, says Bank of England policymaker

Prof Miles expects the "new normal" for interest rates to be between 2.5 and 3%.

Interest rates will rise "pretty soon", Bank of England policymaker Prof David Miles has predicted - as he prepares to leave his role on the committee that takes the decision each month.

Prof Miles told BBC Newsnight that the time to raise the bank rate from its current historic low was "coming".

"I don't think it's anything to worry about, it's a sign of health," he said.

Mr Miles voted to keep rates on hold this month - his last vote on the Bank's Monetary Policy Committee.

He has been on the nine-strong MPC, which votes monthly on interest rates, since June 2009.

He said he was now more optimistic about the UK economy than at any time since he had joined the Bank.

"Within the UK economy consumer confidence is strong, corporate confidence is pretty strong and the financial system is operating near normal now," he added.

But he said he expected the "new normal" for interest rates to be between 2.5% and 3%, and "materially lower" than historically.

His comments come just days after fellow MPC member Prof Kristin Forbes warned that waiting too long to raise interest rates risked undermining the UK's recovery.

"Linger too long in the sun and your skin may take on a slightly pink glow", Prof Forbes warned earlier this week

Earlier this month, MPC members voted 8-1 to keep rates on hold - the first time for months the decision has not been unanimous - and this, together with the comments from Prof Miles and Prof Forbes, suggests that the balance is shifting.

Bank of England governor Mark Carney has said that when rates start to rise, they will do so only gradually.

At a news conference last month he said the timing for a Bank rate increase was "drawing closer", but cannot "be predicted in advance". The decision would be determined by looking at economic data, he added, including wage growth, productivity and import figures.

Several economists interpreted Mr Carney's comments, and information in the Bank's recent Inflation Report, as a signal that any rate rise was likely to be put back from the end of this year until early 2016.