LONDON, (Reuters) – Bank of England policymaker Michael Saunders warned households to prepare for “significantly sooner” interest rate hikes due to rising inflation pressures in Britain’s economy.

Saunders stated that investors had right to place their bets on higher borrowing costs, with consumer price inflation above 4%. This adds to the possibility that the BoE will become the first central bank major to increase rates since the outbreak of the pandemic.

I don’t support using code words, or declaring our intentions too far in advance. Saunders explained that decisions are made at the appropriate time.

“But, markets have priced into the Bank Rate rise earlier than expected in recent months. I believe this to be appropriate.”

Nine members of the Monetary Policy Committee unanimously voted to maintain rates at 0.1% last month.

Saunders, Deputy Governor Dave Ramsden and others voted against the BoE’s plan to stop government bond buying ahead of schedule.

Saunders stated that markets have fully priced in the February rate rise by the British central banks and only half had priced in an increase in borrowing costs in December.

He said, “I don’t want to make a comment on which one but it seems appropriate that markets have taken a much earlier path to tightening pricing than before.”

Saunders’ comments came just after Andrew Bailey, BoE Governor, said that inflation exceeding the 2.0% target was alarming and needed to be controlled to stop it becoming permanent.

Bailey stated to the Yorkshire Post that Bailey said, “We will have a very difficult and complex job on our hands. We have to in a way prevent the thing from becoming permanently embedded because it would clearly be very harmful.”