Disagreements may delay the Bank of England rate hike

Disagreements may delay the Bank of England rate hike

Disagreements may delay the Bank of England rate hike

The last five years the management of the Bank of England unanimously to keep interest rates at a record low. But this week, there were some differences that prompt investors when it is waiting for its improvement.

BOE Meeting Minutes from the 7th of August, which will be released on Wednesday, at 9:30 am London time, or 4:30 am ET, will help to understand why the Committee on monetary policy decided to keep its benchmark interest rate at around 0.5%. This rate was reduced in March 2009, and was supposed to facilitate the entry of the British economy out of recession.

After years of consensus committee on the issue of interest rates, these reports show that more aggressively minded members start talking about long-term risk inherent in holding rates low, says Craig Erlam, market analyst at Alpari UK.

When Mark Carney became the head of the Bank of England in July 2013, he argued that the Bank does not intend to raise rates as long as the unemployment rate falls below 7% – that can take about 3 years.

In April, the unemployment rate reached 6.9%, and in June was 6.4%, at least 6 years.

At the same time, the recovery of the UK economy has put it in line with the fastest growing developed countries in the world. In the second quarter, GDP grew by 3.2% year on year, and the economy has returned to its pre-crisis peak, which was celebrated in 2008.

It is likely that at least one member of the committee sees that “the reduction of unemployment is not – a reason to vote for a rise in interest rates …., And the economic recovery has reached today, as some believe,” off speed “- said the chief economist at Investec Phillip Shaw.

“Take-off speed” means the level at which the economic recovery becomes self-sustaining, and in January, Carney called leadership of the central bank to do everything possible to bring the economy to this level.