LONDON (Reuters) - The Bank of England’s Monetary Policy Committee came its closest to voting for an interest rate rise since 2007, after the central bank unexpectedly said three of its policymakers backed increasing rates.
Economists had expected only one vote for a rate hike.
Following are comments from economists and analysts.
“With the economy having weathered political uncertainty relatively well in the recent past, and signs emerging that the government may be about to ease back on austerity, today’s decision and minutes support our view that the first hike in interest rates will come much sooner than the April 2020 date implied by markets ahead of today’s meeting.”
“Despite the change in vote split, we remain of the view that no interest hike will be delivered in the course of the next two years.”
“It’s surprising that three members voted for a hike this time given that there are signs that the period of weaker economic growth is long-lasting, and we’ve had more evidence this week of softer pay growth. One would have to ask in this situation where the long-term inflation pressures would be coming from. Clearly the committee is closer to raising rates than we thought, nevertheless there may be a large degree of resistance from the majority of the members, particularly given recent economic evidence. There will be two vacancies on the MPC from the end of the month as well, so we need to know who those are going to be to analyse the dynamics of the committee.”
”Surprising, but let’s not get carried away, it’s (Kristin) Forbes’ last meeting. We have another member to replace Charlotte Hogg, so the balance could look less dramatic at the next meeting. Earnings growth is weak, it’s not obvious that this is changing the monetary outlook. The risks (of a rate hike) have slightly increased clearly.
“Surprised. It doesn’t strike me that the UK is going to have a sustainable inflation problem, particularly given that the economy is slowing. I would be surprised if they managed to push through a rate hike any time soon. (The chance of a rate hike) probably has gone up but it’s clearly not above 50 percent by any stretch of the imagination.”
Reporting by Kate Holton and Paul Sandle; Editing by William Schomberg