No interest rate rise expected until early 2016

Tim Wallace
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THE BANK of England held interest rates again yesterday, keeping the base rate at 0.5 per cent.

Economists believe that the Conservative victory in last week’s General Election may mean rates remain low for longer, as lower spending under the Tories than Labour keeps inflationary pressures down.

“The Bank of England holding rates at 0.5 per cent is unsurprising, as there are few catalysts for a rate increase in 2015,” said Nick Dixon, Investment Director at Aegon UK.

“On the contrary, the triple alliance of muted inflationary pressure, low wage growth and sterling strength has put paid to this until at least 2016.”

Governor Mark Carney will tomorrow present the latest inflation report, outlining the Bank’s forecasts for economic growth and prices. He is not expected to make any moves to change the 2016 rate rise forecasts.

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