Press comment: Where next for the Bank of England as interest rates held?

If you’re covering the Bank of England’s decision to hold interest rates, please see the following commentary from Quilter Investors head of investments, Anthony Gillham: 

“Rates only recently increased to 0.75% and a further hike today would have been a surprise. However, looking further ahead there might be some added impetus to raise rates again slightly quicker than expected.

“In the last week or so we have seen UK GDP come in higher than anticipated and wages have picked up somewhat, edging ahead of inflation measures. That slightly firmer data, combined with some added certainty now that we know Mark Carney is staying until 2020, could bolster the Bank’s confidence in the case for future rate rises.

“Nonetheless, that could be countered by the fact that real wage growth has still been very weak for a long time. Meaningful upward pressure on pay has been stymied, with weak productivity growth compounded by lower than projected capital expenditure from businesses.

“Structural changes in the workplace have also seen a rise in the number of workers with limited negotiating power when it comes to pay. This is in part prompted by the steady increase in the rise of pay-as-you-go, single use services – shops always need to be staffed but e-commerce firms can flex the hours of warehouse staff as orders fluctuate, and ride-hail taxi drivers are paid by the job.   

“And of course the elephant in room has not gone away, exemplified by Dominic Raab’s frustration today at businesses blaming poor results on Brexit. The prospect of a disorderly exit from the EU will continue to be prominent in the Bank’s thinking and it will be wary of introducing rate hikes while the situation remains so uncertain.”  

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