Bank of England policymakers expected to bypass rate rise this week

Helen Cahill
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The MPC meets later this week (Source: Getty)

Economists are expecting the Bank of England to bypass a rate hike this week, despite three members of its Monetary Policy Committee (MPC) voting for a rate rise last month.

Since the members of the policy committee last met, GDP growth has backed up to 0.3 per cent and inflation defied expectations, falling from 2.9 per cent to 2.6 per cent.

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And, there's been a reshuffle on the panel. Kristin Forbes, one of the MPC members who backed a rate rise, has departed the group.

Forbes has been replaced by Silvana Tenreyro, an academic at the London School of Economics. It will be her first meeting, and she is not widely expected to vote for a rate rise.

Vicky Pryce, board member at the Centre for Economics and Business Research, said the committee will "vote to keep rates where they are".

"Although there are still a couple of hawks in the MPC who are likely to vote for raising rates, economic fundamentals should win over," she said.

"Inflation has fallen back for the moment and the latest data suggest the economy is growing only modestly. What is more, second quarter GDP figures suggested growth was entirely dependent on consumers who are reducing their savings ratio to record lows to finance spending."

Kallum Pickering, senior UK economist at Berenberg, said the central bank will likely maintain its hawkish guidance, and that there could be at least two dissenters in the vote on the rate.

"We look for a first hike in November, with risks to that call depending on how growth and inflation develop during the third quarter," he said.

The new deputy governor, Sir David Ramsden, will take up his seat on the committee after he starts in his role on 4 September.

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