"I can envisage those conditions for considering tightening being met somewhat sooner than I had previously expected."
During a speech yesterday, Dave Ramsden, who is also the Bank of England's deputy governor for markets and banking, said that CPI inflation and GDP growth had become "notably stronger than expected" in the Bank's May forecast.
Dave said it is "now conceivable that the pre-Covid peak in output in 2019 Q4 will be restored in the course of the current quarter". He said inflation looks likely to peak "well above 3% and maybe nearer to 4%", adding that he is now "somewhat less confident than I was that there remains a margin of spare capacity in the economy".
The GDP releases for March and April revealed monthly growth rates of 2.1% and 2.3%. CPI inflation rose to 2.1% in May, and then to 2.5% in yesterday morning’s June data release.
Dave said that the "faster move to above-target inflation" could lead to a tightening of monetary policy, including a potential Bank Rate rise, in the near future.
He said: "Based on the rapid pace of developments since we published our May forecasts and the shift in the balance of risks I can envisage those conditions for considering tightening being met somewhat sooner than I had previously expected.
"But there should no presumption that the recent strength in demand and inflation will be sustained. Along with the rest of the MPC I will continue to watch the data and newsflow closely."