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MPC unanimous on unchanged rates, but Governor hints rise sooner than expected

22 Jul 2015

The Monetary Policy Committee (MPC) members were unanimous in voting to keep UK interest rates unchanged at the record low of 0.5%, whilst Bank of England chief Mark Carney hinted in a speech that rates may increase earlier than markets expect

Additionally, a survey by well-respected Markit Economics showed that 34% of respondents expect a rate rise within the next six months, versus 24% prior to the Governor's speech

On balance it looks like the first rate rise will not arrive until 2016, and seems to be dependent on the pace of wage increases - these recently picked up for certain industrial sectors, especially for the private sector - though clearly not enough to cause disagreement amongst MPC members - yet

When interest rates do rise, the consensus is that they may then only rise to a peak of about 2.5-3%, as opposed to 4.5-5%, which was the 'normal' level of UK rates pre-financial crisis.

Go Global can feel the interest-rate tension rising.....


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