Bank of England keeps rates at rock bottom despite UK recovery
INTEREST rates have now been at 0.5 per cent for more than five years, as the Bank of England yesterday held them at rock bottom again.
Policymakers have indicated they will not raise rates until the recovery eats away at enough spare capacity that inflation starts to rise.
That promise means the Bank’s monetary policy committee will consider factors like unemployment, wages, the number of people working part time when they want more hours, and surveys of firms’ spare capacity.
“If earnings start moving up appreciably, interest rates will likely start to rise earlier than the second quarter of 2015, although still only gradually,” said economist Howard Archer from IHS Global Insight.
“Our current view is that the Bank will most likely start edging interest rates up in the second quarter of 2015, and they will reach one per cent by end-2015 and two per cent by end-2016.”