The question on the lips of many of our customers and important finance industry leaders, is when can we expect to see interest rates rise?
Recent figures from the ONS (Office For National Statistics) have shown negative inflation of 0.1%, as the consumer prices index fell slightly year-on-year. Inflation is expected to rise soon, with the effects of falling energy and petrol costs being removed from the calculations. Minutes taken from the Monetary Policy Committee showed a unanimous vote to keep rates on hold at 0.5% again in the May meeting and the current expectation is for a late spring 2016 first move in the base rate.
What the Experts Say?
Howard Archer, the Chief Economist at HIS Global Insight, said: “The May MPC minutes indicate that there is little likelihood of the Bank of England cutting interest rates despite the UK dipping into deflation in April, and they appear to reinforce the view that the Bank of England will start inching interest rates up during the first half of 2016.”
“It currently looks a very close call as to whether the Bank of England acts in the first or second quarter. We have put back our expectation of the Bank of England lifting interest rates from 0.5% to 0.75% from February to May 2016 – although we certainly would not rule out a move in the first quarter. We have also scaled back our expectation of monetary policy tightening over the longer term and we now see interest rates only reaching 2% by the end of 2017.”
Interest rates had been expected to rise in mid-2016 as laid out by the Bank of England in its latest inflation report. Figures show that a significant increase may take considerably longer.
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