UK Economy Making Case for Rate Hike

An improving economy, a strengthening jobs market and hawkish comments from central bank officials: Sounds like the U.S. but it’s the U.K. where talk of higher interest rates is getting louder.

Martin Weale, one of the more hawkish members of the Bank of England’s (BoE) Monetary Policy Committee (MPC), said this week that the country should get ready for a rise in borrowing costs as early as August, the Financial Times reported.

A rate hike may not be imminent but the remarks are significant, economists say. That’s because they highlight a difference of opinion emerging from the nine-member Monetary Policy Committee, which was unanimous in its decision to keep rates at a record low of 0.5 percent in June.

In addition, labor market conditions are proving stronger-than-expected. Data released last week showed that workers’ pay in the U.K. grew at the fastest rate in almost four years in the three months to April.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza