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

Sterling climbs to its highest level since Brexit vote

0
Written by: YourMoney.com
15/09/2017
The pound has climbed against the dollar and euro to levels not seen since the Brexit vote after a second Bank of England committee member suggested a Base Rate rise could occur within the coming months.

In a speech today given by external Monetary Policy Committee (MPC) member Gertjan Vlieghe – who has previously been keen to hold rates low – the hawkish tone of the September meeting was reaffirmed.

“The evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise”, said Vlieghe at the Society of Business Economists’ Annual conference in London.

He noted that despite a clear weakening of GDP growth in the first half of the year, the amount of economic slack continues to be eroded.

“If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in Bank Rate might be as early as in the coming months,” said Vlieghe.

Moreover, he added that wage growth is not as weak as earlier this year, while “some pay-related surveys also suggest a modest rise in wage pressure in recent months.”

The speech echoed comments made by BoE governor, Mark Carney, yesterday when he said “the possibility of a rate hike has definitely increased”.

It caused the pound dollar rate to climb to $1.36 and against the euro, it reached above €1.13.

Majority view

If these labour market trends continue, Vlieghe said he would expect it to lead to an upward pressure on inflation. According to the MPC member, there are also some early signs of stronger consumption growth in Q3, while conceding that whether it will last is an “open question”.

By affirming that a rate rise may be necessary in the coming months, Vlieghe joined the majority of MPC members who attended the meeting.

Oxford Economics commented that, “while flexibility on the part of MPC members is to be welcomed, the case for tighter policy based on supposedly diminishing slack and rising wage growth is a slim one. A hike in Bank Rate in November still strikes us as unlikely,” it said.

The speech also touched on the uncertainty surrounding the Brexit process, and whether it will have “a larger impact on the economy than we have seen so far”. “If that happens, monetary policy would respond appropriately,” said Vlieghe.

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.

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

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.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Buy-to-let: what next for the hobbyist landlord?

Much has been written in recent weeks about the difficulties faced by professional buy-to-let landlords in borrowing from the major...

Close