You are here: Home - Saving-Banking - News -

Bank unlikely to raise interest rates in May after latest economic data

0
Written by: Lana Clements
03/05/2018
The Bank of England is unlikely to raise interest rates when the Monetary Policy Committee (MPC) meets next week, after the latest data further pointed to a lacklustre economy, experts said.

Output in Britain’s crucial services sector lifted only slightly in April, following a plunge in March, PMI data from Markit/CIPS Service showed today.

It is the latest in a string of disappointing data on the UK economy, which has prompted market expectations of a May interest rate rise to fall from 90% to around 10% in a matter of weeks.

Earlier this week, data from the same provider showed manufacturing output in April fell further than expected.

It comes after UK economic growth for the first quarter came in below expectations at just 0.1%.

At the start of the year, Bank of England monetary policymakers had warned interest rates were likely to rise sooner and faster than had been expected.

But last month governor Mark Carney acknowledged that economic performance data had become “softer”.

Interest rate rise not likely before August

Most economists now believe a rate hike is unlikely in May but predict a rise could still be on the cards in 2018.

The Monetary Policy Committee (MPC) is considered most likely to increase interest rates to coincide with the release of its quarterly inflation report, making August the next opportunity after May.

Paul Hollingsworth, senior UK economist at Capital Economics, said: “The slight pick-up in the services PMI in April will do little to assuage fears that the economy has suffered a loss of underlying momentum and makes the chance of a rate hike next week extremely slim.

“Taken together with the construction and manufacturing surveys released earlier this week, the all-sector PMI points to GDP growth of about 0.3%, suggesting that the economy is struggling to re-gain momentum.”

However, he added: “With the survey noting that wage cost pressures in the services sector are building, the committee is unlikely to want to wait too long before raising interest rates again.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week