News Column

Minority of policymakers set to vote for a rate hike this week

August 4, 2014


RAPID economic growth and diving unemployment could prompt some policymakers at the Bank of England to vote for an interest rate rise this Thursday.

Economists believe the recovery is strong enough for the monetary policy committee (MPC) to start moving to raise rates beyond 0.5 per cent.

It would mark an important change as rates have been held at that level since 2009.

A year ago, governor Mark Carney said the MPC would start considering a hike when unemployment fell below seven per cent. Joblessness reached 6.5 per cent in the three months to May.

Now he is also looking at other measures of slack in the economy, such as wages, which are still weak.

"We expect the first dissent to come at this meeting," said Nomura economist Philip Rush. "However, we assign only a seven per cent probability to a change being announced this month."

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Source: City A.M. (UK)

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