THE Bank of England is expected to leave interest rates unchanged this week after inflation dipped last month and economic growth continues to stutter.
Economists believe the Bank’s Monetary Policy Committee (MPC) will keep rates at 0.25 per cent on Thursday, despite three out of eight policymakers calling for an increase last month and amid conflicting public pronouncements in recent weeks. Before June’s inflation reading of 2.6 per cent, there had been growing clamour for a rate rise amid a Brexit-fuelled increase in the cost of living.
While remaining above the Bank’s two per cent inflation target, it represented an easing from the previous month’s 2.9 per cent. However, latest GDP figures showed growth was limited to 0.3 per cent in the second quarter. Howard Archer, chief economic adviser to the EY ITEM Club, said: “The odds now very strongly favour the Bank of England keeping interest rates at 0.25 per cent. There have also been signs of growing division among rate setters, with Ian McCafferty, Kristin Forbes and Michael Saunders voting for a rise in June and the Bank’s chief economist Andy Haldane suggesting he may support a “prudent” increase this year. It is unclear how many policymakers will vote for a rise. Forbes stepped down at the end of last month and her replacement, Silvana Tenreyro, is an unknown quantity.
Economists also expect the Bank to downgrade growth forecasts when it releases its quarterly inflation report following a slump in consumer confidence and a string of weak economic data.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here