ECONOMISTS are sticking with their overall forecast that the first rise in UK base rates from their record low of 0.5 per cent will not come until the second quarter of next year, a survey has revealed.
And the economists see below-trend quarterly growth of between 0.5 per cent and 0.6 per cent through to the end of 2016.
Of 43 economists polled by news agency Reuters, 33 now expect the first quarter-point rise in base rates from 0.5 per cent to come after March.
Economists’ forecast timing of the first rate rise slipped back to the second quarter in a previous poll undertaken by Reuters late last month.
And the latest survey shows that the Bank of England’s quarterly inflation report, published last week, has done nothing to change this view.
Brian Hilliard, at Societe Generale, said: “If the MPC were seriously trying to prepare the markets for a rate increase in Q1 2016 then it would have needed to markedly change the tone of its rhetoric to inject a note of urgency into its comments. In fact, it went in the other direction.”
Figures published by the Office for National Statistics have shown that UK gross domestic product growth slowed to 0.5 per cent in the third quarter, from 0.7 per cent in the three months to June. And UK manufacturing output contracted for a third consecutive quarter in the three months to September.
The projected quarterly growth of 0.5 per cent to 0.6 per cent equates to an annualised rate of expansion of between two per cent and 2.4 per cent. This is adrift of the UK’s long-term average annual growth rate, put by Bank of England Governor Mark Carney at about 2.75 per cent.
In the Reuters survey, economists predicted annual UK consumer prices index inflation would average 1.3 per cent next year, and that it would not reach the two per cent target set for the Bank of England by the Treasury until 2017.
There was annual deflation of 0.1 per cent on the annual CPI measure in September.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here