Bank of England rates could rise more than thought

Thrugelmir

Another timely reminder that the hour glass is about to be spun over. Farewell to an era.

Bank of England Chief Economist Andy Haldane said on Wednesday he thought there was a chance that interest rates would need to rise faster than the BoEs central view in order to bring inflation to target.


I would judge the risks to the (Monetary Policy Committees) latest projections, for both UK demand and inflation, as lying to the upside, Haldane wrote in an annual report to parliament.

Both the world economy and Britain could well do better than the BoE!!!8217;s most recent forecasts, he added.

In my view, this would put the balance of risks to the path of interest rates necessary to return inflation sustainably to target to the upside,Haldane said.

Carney and his fellow BoE interest rate-setters said this month they would need to raise borrowing costs sooner and by more than they had expected previously if the economy performed in line with their forecasts.

Britains economy has lagged behind stronger growth in much of the world, due largely to the impact of the 2016 Brexit vote. But it has held up better than expected at the time of the shock referendum decision to leave the European Union.

https://uk.reuters.com/article/uk-britain-boe/bank-of-england-rates-could-rise-more-than-thought-says-chief-economist-idUKKCN1G51UI

westernpromise

Fortunately I have a fixed rate on my home mortgage and a tracker at BoE plus 0.79% on the rental, but I am not sure I believe this stuff anyway. We've been hearing rates are about to go up for what, 9 years now?

Carl31

I don't think they will do anything until March 2019, if they do it's pretty telling about their true Brexit forecasts

lisyloo

I!!!8217;m not so sure. I think we could see a rise in may. I!!!8217;ve put my money where my mouth is and given notice on an isa account.
Fortunately my mortgage ends in November for good - yay

Thrugelmir

Carl31 wrote: »

I don't think they will do anything until March 2019, if they do it's pretty telling about their true Brexit forecasts

Early as May, seems possible.

triathlon

There is about 1 in 100 odds that Rates will be over 2% by end of 2019

LHW99

Markets appear to be predicting a steeper rise in US rates, so that may feed through to our (and other) rates IMO making an early rise more likely

economic

Luckily fixed my mortgage for 2 years back in November at 1.54%. Dont have to worry about rates for 2 years

tara747

I saw Blanchflower (thankfully no longer on MPC) saying that rates couldn't be raised because there was a tiny uptick in unemployment. Oh yeah? As far I knew, the MPC's only remit is to keep inflation at or near 2%.

And if unemployment is a factor for MPC decisions, why the !!!! didn't rates go up when it was falling?? Lying !!!!. There is literally no !!!!ing circumstance in which he would raise rates, and it's robbing us blind.

HAMISH_MCTAVISH

tara747 wrote: »

As far I knew, the MPC's only remit is to keep inflation at or near 2%. .

A common misconception.

The MPC actually has two remits.

1) To maintain price stability

2) To support the economic policies of Her Majesty's Government, including it's objectives for growth and employment.

westernpromise

Well, that didn't last long:
https://www.standard.co.uk/news/politics/interest-rate-rise-less-likely-after-growth-downgrade-gives-philip-hammond-a-headache-a3773286.html

the pound fell 0.75 of a cent against the dollar to $1.3892 in early trading as investors bet it was now less likely that the Bank of England will order an interest rate rise in the spring