‘Prospect of an early rate hike increase’ – NIESR Comment on MPC decision
- Yesterday the Bank of England’s Monetary Policy Committee voted 5-3 to keep Bank Rate unchanged at 0.25 per cent and maintained government bond purchases at £435bn and corporate bond purchases at £10bn
- This is despite consumer price inflation of 2.9 per cent in 12 months to May, well above the 2 per cent target and exceeding the Bank’s expectations.
Rebecca Piggott, Research Fellow at NIESR, said “The MPC voted narrowly to hold monetary policy unchanged, a closer vote than market expectations. This level of disagreement raises the probability of an interest rate rise in the near future and that would exert further pressure on household budgets, which are already under pressure from subdued real wage growth. Furthermore, it focusses the spotlight on the two forthcoming appointments to the MPC, which could tip the balance of future votes either way.
One important reason for the close vote was the latest inflation figure which surprised the Bank on the upside. We forecast consumer price inflation of 3 per cent and 2.8 per cent on average in 2017 and 2018 respectively, before a return to target in 2019.”
Note: NIESR’s latest quarterly forecast (published 10th May 2017) projects GDP growth of 1.7 per cent per annum in 2017 and 1.9 per cent in 2018 (see here for the associated press release).
Notes for editors:
For further information and to arrange interviews, please contact the NIESR Press Office:
Paola Buonadonna on 020 7654 1923 / email@example.com
NIESR aims to promote, through quantitative and qualitative research, a deeper understanding of the interaction of economic and social forces that affect people's lives, and the ways in which policies can improve them.
Latest News from
Adam Smith Inst - Government is right to continue Everything But Arms trade policy17/08/2017 13:35:00
With the release of the UK Government's briefing paper on future customs arrangements the Adam Smith Institute welcomes the government's continued support post-Brexit of the EU's current Everything But Arms initiative with Least Developed Countries. But we can go even further.
IFG - A customs deal is necessary but not sufficient for frictionless trade17/08/2017 12:35:00
A deal on customs is important to reducing post-Brexit trade friction, but a new paper from the Institute for Government argues that is only half the story.
JRF - Five million want more work or better jobs in UK’s biggest cities17/08/2017 11:35:00
Over five million people want to work, want more hours or are trapped in low paid and insecure work across the UK’s 12 biggest cities, according to new report.
NEF - New research: More than half of self-employed not earning a decent living17/08/2017 10:35:00
More than half of all self-employed people are failing to earn a decent living, according to new research by the New Economics Foundation.