MPC

Britain's recovery has become entrenched and the Bank of England should start to raise interest rates in the coming months to reflect the stronger economy, according to one of its most dovish policymakers.

The official UK interest rate could settle at an average of 3% in a few years, the outgoing deputy governor of the Bank of England has predicted.

The Bank of England may find monetary policy such as raising interest rates "the only game in town" to combat financial stability risks such as the housing market, the deputy governor has warned.

The Bank of England looks set to leave interest rates on hold again this week, but a hike before the General Election is seen as increasingly likely.

Mark Carney said UK interest rates could rise before next May's general election if there are continued sustainable improvements in the economy.

A leading Bank of England policymaker has said the base rate is likely to rise in "spring 2015" in unusually revealing comments made this afternoon.

It is "not unreasonable" for investors to anticipate a 2% base rate as early as 2016, but increasing rates is still considered a last resort to tame the housing market, according to Bank of England policymaker David Miles.

Sterling has climbed against a basket of currencies including the dollar this morning after the Bank of England altered its forward guidance policy and revealed GDP is expected to overshoot expectations.

Three former members of the Bank of England's rate-setting Monetary Policy Committee (MPC) have suggested interest rates could rise sooner than expected.

FIVE THINGS