growth forecasts Tag Archive

  • BOE backtracks

    2 Min Read

    Following, what seemed to be a bold move of laying out the conditions that it would look to start raising interest rates, the Bank of England this week was forced to reiterate its position following back to back better than expected data.

    In his original statement Mark Carney said that the Bank would only start to raise interest rates once the unemployment figure fell below 7%, but barely a month later and the figure was in touching distance at 7.%, which is now expected to be reached by Spring.

    So rather than settling the markets as per his original intentions, this sent the markets into disarray as analyst predictions for rate rises were adjusted and readjusted.

    To add fuel to the markets the Bank increased it’s UK growth forecast from 2.8% to 3.4% which forced Carney to make another statement.

    “Forward guidance is working…….expected interest rates have remained low even as the economy has recovered strongly, uncertainty about interest rates has fallen, and most importantly, UK businesses have understood the message.”

    But to clarify he stated that even when rates do eventually rises will be gradual. Analysts now predict that rates will start to rise in the first quarter 2015 and will only reach 2% by 2017.

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