| UK
Interest Rate: 5.25%
UK
Interest Rates Forecast: Further 0.25% rise possible
at some point
Interest
Rates Stay On Hold for February
The
Bank of England's Monetary Policy Committee have chosen
to keep interest rates on hold for
February, suggesting that they would like to wait a
little longer to see the effects of their three previous
rises before deciding on whether to increase rates further.
It
had been thought that the Bank might follow-up January's
surprise increase with a further rise in February, and
many analysts still believe there may be one more interest
rate rise to come.
Philip
Shaw, Chief Economist at Investec, believes there will
be another rise:
"Given
the potential upside risks posed by above-trend growth,
firmer wage settlements, more 'rogue' inflation numbers
and a resumption of housing market strength,
we are still pencilling in a rise for
the second quarter of the year."
These
sentiments were echoed by CBI Chief Economic Advisor
Ian McCafferty, who commented that it is "too early
to say if interest rates have peaked."
Salary
Rises Suggest Strengthen Case For Interest Rate Rise
Despite
average pay growth lagging behind the retail price index
measure of inflation, pay settlements have been improving
over the last three months.
The
Voca take-home pay index - which measures salary payments
on a three-month moving average – rose from 2.9
per cent in December to 3.3 per cent in January, strengthened
particularly by service sector pay, which rose to 4.6
per cent in January (above RPI inflation) from 3.2 per
cent in December.
Although
the large bonus payments to City financial services
workers may have skewed these averages somewhat, continued
increases in wage settlements will strengthen the case
for a further interest rate rise later
this year, as the Bank of England seeks to control and
reduce inflation.
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