The collective view of the Monetary Policy Committee (MPC) in June was that “an ongoing tightening of monetary policy over the forecast period” would be necessary if the economy evolves in line with its forecast. Since then, the hard and survey data have added to the evidence that growth rebounded in Q2. Admittedly, the vote looks likely to be split, with Jon Cunliffe hinting in a speech that he will wait for signs that domestic inflationary pressure has strengthened further before voting to raise rates. But while it’s true that inflation and wage growth have been a little subdued, the latter is already in line with the Bank’s forecast for Q4. Overall, we think investors are right to expect the MPC to raise interest rates in August. What’s more, so long as growth remains robust over the remainder of the year, as we expect, and progress towards a deal is made in the Brexit negotiations, the Committee is likely to raise rates again in November.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services