Split committee holds interest rates

The Bank of England has held interest rates at half a per cent but hinted that an August rate rise has become more likely.

In a decisive move, Andrew Haldane, the Bank’s chief economist, joined two other Monetary Policy Committee members in voting to raise rates to 0.75 per cent.

The nine-member MPC was split 6-3, with Bank governor Mark Carney leading the group who voted to hold rates at 0.5 per cent.

The last time three people “dissented” from the overall view, in June 2017, rates rose the following November.

Alasdair Ronald, senior investment manager at Brewin Dolphin in Glasgow, said: “The Bank of England left interest rates unchanged again today, as expected. It prefers changes to coincide with the release of its inflation report, with the next opportunity being August; but the economic data will need to improve for that to happen. Slower growth with our export markets in the Eurozone and the dwindling benefit from Sterling’s devaluation are factors. The impact of Brexit and trade uncertainty are harder to measure. The market is currently reflecting a very shallow trajectory of rate increases.

“Wages continue to be the dog that doesn’t bark, despite a tight labour market and business surveys describing upward pressure. A welcome improvement in recent productivity would suggest that they can rise without causing inflation.”