Ignis' Thomson: BoE should hike rates in February 2012

The Bank of England should raise interest rates by 0.5% in February next year, as the month will be a "window of opportunity" for policy change, said Stuart Thomson at Ignis.

The firm's chief economist said the VAT hike to 20% in January this year and imported inflation from soaring commodities prices has kept UK inflation high, at 4.5% in April, but raising interest rates now would be like "kicking an economy when it is down." "There is a window of opportunity to raise rates in February 2012, because inflation will come down rapidly and for a brief period, there will be real income growth - so that will be the time to do it," he said. "King could easily get inflation down to 2%, but raising rates would kill economic growth." Thomson said the reduction...