UK interest rates have been left on hold at an all time low of 0.25% after Thursday's latest meeting of the Bank of England's Monetary Policy Committee (MPC). The vote was seven to stick, two to twist (for an increase).
But the call for increases in interest rates is getting louder.
Some City analysts are already calling for the first base rate rise in more than a decade. Number crunchers at investment bank Berenberg claim that monetary policy ‘has done its job,’ and called for ‘policy to begin to normalise.’
BANK OF ENGLAND'S FOUR OBJECTIVES
Berenberg’s analysis shows the Bank of England used interest rate manipulation to meet four objectives following the financial crisis. These were to sustainably return inflation to 2%, support asset prices and aid balance sheet repair, increase the flow of credit to the real economy, and return the economy to full employment.
‘Monetary policy has achieved all of these aims,’ Berenberg’s team say.
NOVEMBER, THE NEXT D-DAY?
Berenberg speculates that a rate rise could come as soon as November’s meeting of the MPC.
The headline base rate last increased in July 2007, going from 5.5% to 5.75%. The global financial crisis a year later saw the Bank of England slash rates to 0.5% where they stayed until August 2016, before being cut to the current historic low of 0.25%.
