The chances of a May rise in interest rates have increased sharply after two members of the Bank of England’s monetary policy committee voted for an immediate hike in borrowing costs.
Sterling rose on foreign exchanges on news that Ian McCafferty and Michael Saunders had backed a quarter-point rise in the bank rate to 0.75%.
While the other seven members of the MPC voted to leave rates unchanged, the tone of the minutes of this week’s meeting left the City convinced that an upward move was on the way.
Although the economy grew by a modest 0.4% in the final three months of 2017, the MPC said there was a chance activity in late 2017 would be revised higher and signalled concern about rising earnings growth.
“The unemployment rate remained low in the three months to January. The firming of shorter-term measures of wage growth in recent quarters and a range of survey indicators suggest pay growth will rise further in response to the tightening labour market,” the MPC said.
via The Guardian
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