IT has been a wild ride in the last week for those trying to assess the chances of a near-term rise in UK interest rates.
Given the very sharp slowing of UK growth this year, the view had been the Bank of England’s Monetary Policy Committee would for a while yet be prepared to hold rates. That it would “look through” the painful spike in annual UK inflation fuelled by sterling’s post-Brexit vote slide.
However, last Thursday, it emerged the MPC’s vote the day before to hold base rates at their record low of 0.25 per cent had been a lot closer than expected. The vote was five-to-three, with Ian McCafferty, Michael Saunders and Kristin Forbes pushing unsuccessfully for a quarter-point rise.
Yet other things indicated this might be the high water mark of support for a rate rise in the near term. Ms Forbes steps down from the MPC this month. And Bank Governor Mark Carney gave his view on Tuesday that “now is not yet the time” to start raising rates.
There was no surprise that Bank chief economist Andy Haldane, who had cut a dovish figure, voted to hold rates last week. But what was certainly
a big surprise was the signal yesterday he will likely vote to raise rates “relatively soon”.
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