The Bank of England Monetary Policy Committee (MPC) today announces its April 2011 decision on UK interest rates. Speculation is mounting that a rise in interest rates - which last month notched up two calendar years at the record low of 0.5% - could be imminent. But how likely is it that a rate increase could arrive today?
It is widely expected that the European Central Bank (ECB) will raise euro area interest rates today. This follows recent comments from ECB president Jean-Claude Trichet that the ECB is "in a posture of strong vigilance" on the current inflationary threat. Analysts have taken this as a sure sign that an April 2011 euro area rate rise is on the cards. A rate rise from the ECB would take euro area interest rates from their current record low of 1%, which has been maintained for 22 months, and would significantly increase pressure on the MPC to raise interest rates in the UK.
However, Bank of England Governor last month restated his belief that a UK interest rate rise in the present economic context would be a futile gesture, arguing that inflation falling back to target is a question of when, not if.
It is widely expected that the European Central Bank (ECB) will raise euro area interest rates today. This follows recent comments from ECB president Jean-Claude Trichet that the ECB is "in a posture of strong vigilance" on the current inflationary threat. Analysts have taken this as a sure sign that an April 2011 euro area rate rise is on the cards. A rate rise from the ECB would take euro area interest rates from their current record low of 1%, which has been maintained for 22 months, and would significantly increase pressure on the MPC to raise interest rates in the UK.
However, Bank of England Governor last month restated his belief that a UK interest rate rise in the present economic context would be a futile gesture, arguing that inflation falling back to target is a question of when, not if.
Read more in the April 2011 economic commentary from XpertHR, which
considers the current state of the UK economy, its implications for HR,
employment professionals and reward practitioners, and also offers a
round-up of latest data on all key economic indicators of relevance to
HR.
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