In the Bank of England the supporters of an interest rate rise has added votes
The Bank of England once again kept its interest rate unchanged at 0.5%. This decision was expected by the market, but a surprise was the fact that, according to the published Protocol of today’s meeting of the monetary policy Committee for raising interest rates voted for three of the nine participants, all others were in favour of an interest rate not to change.
“Opposition” is unexpectedly joined by Andy Haldane, who was previously a strong supporter of the policy pursued by the Bank of England mark Carney. The program purchases of government debt by the Bank of England also remained unchanged (in the amount of 435 billion pounds per year).
The UK economy shows mixed signals. In may, annual consumer price inflation in the UK remained at the level of 2.4%, while the market expected inflation in may to rise at least 2.5%. Note that inflation in the UK slowed down from the beginning of 2018.
However, retail sales in the UK in may exceeded analysts ‘ expectations. The growth rate of retail sales in may was 1.3% compared with April, although the market had expected growth of this indicator only 0.5%.
At the same time, the negative balance of trading balance of great Britain continues to grow, and this applies to trade with EU countries and non EU countries. And industrial production in April fell by 0.8% in March, although the market was expecting a small growth of 0.2%. Average wages in April rose at an annual rate less than analysts had expected (growth of 2.8% compared to the expected growth of 2.9%).
Now advocates strengthening of the pound will have to wait for August, according to some experts, the rate increase in August more likely, although a key factor in this decision will, most likely, the rate of inflation. It is possible that a significant obstacle to a rate hike in August will not, because last year inflation was more than high, almost 3%, and a reduction in the current year can be quite normal after such a rapid period of growth.
However, of the opinion that the decision to raise interest rates may be made no earlier than November, and it makes the foreign exchange market nervous. News from the Bank of England British pound today strengthened against the dollar by 0.1%, to Euro – by 0.5%.
The Deputy Director of analytical Department,