Inflation continues to run at 3.3%, well above the government’s 2% inflation target but MPC members remain reluctant to dampen the burgeoning economic recovery, according to a Guardian story today.
Andrew Sentence was the only voice to vote for a rise in December, but economists continue to expect rates to stay at 0.5% for some time to come.
Howard Archer, chief economist at IHS Global Insight said the MPC was likely to be “reluctant to adjust policy until they get a clear idea of how the economy is reacting to fiscal policy being tightened from the start of 2011.”
Ben Thompson, director of mortgages at Legal & General said it expects the first hike to come in January 2012, but said he checked this morning this is still its official line.
“I am increasingly feeling that interest rates could go up sooner, but that only serves to stoke the remortgage market, which is seeing more activity all the time,” he said.
“The reasons are two-fold. Homeowners are remortgaging partly out of fear they will miss the boat on rates and secondly, with some great deals from lenders like Nat West and ING, some remortgage rates are starting to look like a better idea.”
