Could Interest Rates Increase in May?


The Bank of England has so far kept interest rates on hold, but there are indications that they could rise in the near future…

Rising wages and slow productivity could see the Monetary Policy Committee (MPC) increase interest rates in an attempt to pull back inflation. In the last MPC meeting, just two members voted to raise rates immediately to 0.75% from 0.5%, while seven members voted against the motion. The minutes of the meeting said:

"The best collective judgement of the MPC remained that, given the prospect of excess demand over the forecast period, an ongoing tightening of monetary policy over the forecast period would be appropriate.

"The May forecast round would enable the Committee to undertake a fuller assessment of the underlying momentum in the economy, the degree of slack remaining and the extent of domestic inflationary pressures."

Many economists have interpreted the minutes from this MPC meeting as an indication we could see an increase in May.

For more on the balancing act the Bank of England faces, head over to The Telegraph website.