You are here: Home - News -

November rate rise ‘on a knife-edge’ – economists

by:
  • 20/10/2017
  • 0
November rate rise ‘on a knife-edge’ – economists
Economists at Oxford University believe the decision by the Bank of England (BoE) on whether to raise interest rates in November is ‘on a knife edge’.

Expectation has been growing in the last month that the Bank of England’s Monetary Policy Committee (MPC) will vote to raise the bank’s Base Rate for the first time in almost a decade at its next meeting.

This has been driven by statements from BoE governor Mark Carney that rates were likely to rise in the near term, and as a result the banking system has already reacted with increases in Swap rates, which have pushed mortgage interest rates higher.

However, Oxford Economics suggests the decision may not yet be a forgone conclusion.

It agreed that inflation climbing to its highest point in five and a half years (at 3%) and the continued low jobless rate would push for a rate rise, however it noted that other factors suggested otherwise.

These included that inflation was pushed higher by import-led external factors which should wear-off soon, and there had been falls in regular pay growth and retail sales.

 

55% chance

This had prompted three members of the MPC to publicly hint that the time may not be right for a rate rise.

In particular, deputy governor Sir Jon Cunliffe (pictured) told the BBC: “We are not seeing pay pressure and for me we are not seeing sustained signs of domestic inflation pressure”.

The Oxford Economics report said: “All in all, the committee is perhaps on more of a knife-edge than appeared to be the case a week ago.”

It added: “Overall, the odds of the MPC increasing Bank Rate in November have slimmed. In light of last week’s developments, we attach a probability of 55% to a hike – a knife-edge indeed.”

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @thewritertype: Thoughts and prayers with Americans heading to their new partner’s family home for Thanksgiving.
  • RT @VickyHartleyMS: The Budget 2017 roundup - all the top mortgage and housing headlines - Mortgage Solutions https://t.co/tU2bT2W3p9 via @…
  • RT @VickyHartleyMS: Budget 2017: Fintech competition launched to develop FTB rent history-mortgage affordability tool - Mortgage Solutions…
Read previous post:
Craig Calder Barclays
What do mortgage borrowers want? – Barclays

What is the top priority for borrowers when choosing a mortgage provider? A low rate is the answer which immediately...

Close