MPC may choose to wait until December before pressing the button on interest rates - EY ITEM Club

15 September 2016

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  • MPC stands pat on rates…
  • …and pushes up growth forecast for Q3
  • But another rate cut before the year ends is still on the table

Martin Beck, senior economic advisor to the EY ITEM Club, comments:

“Following the monetary firepower that the Bank of England unleashed last month and the recent run of unexpectedly upbeat economic data, the MPC chose to stand pat on interest rates and push up its GDP growth forecast for Q3.

“Moreover, the vote was unanimous, with last month’s dissenters judging that it would be unwise to immediately reverse the programme of asset purchases that is now underway“The majority of members continued to favour another rate cut by the end of the year if the MPC’s next assessment of the economy, to be published in November, remains consistent with the predictions set out in the last Inflation Report. The need for more monetary activism, however, will be lessened if the Government chooses to undertake a fiscal stimulus in November’s Autumn Statement. As the Autumn Statement will follow the MPC’s November meeting, the Committee may choose to wait until December before pressing the button.”     


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