A survey carried out by the BBC has revealed that economists in the UK do not expect an interest rate rise until ‘at least 2019’.
Economists believe that the Bank of England’s Monetary Policy Committee (MPC) will not want to raise rates whilst Brexit negotiations are ongoing.
The base rate currently stands at 0.25%.
Half of the economists surveyed believe that growth in wages will outpace inflation during the first few months of 2019, the BBC found. In July, the rate of inflation stood at 2.6% – above the Bank of England’s 2% target.
Addressing the issue, Stuart Green, UK Chief Economist at Santander, said: ‘We believe that policymakers will be reluctant to tighten monetary policy until greater clarity emerges around the UK’s post-EU trading framework, and our expectation of declining inflation through 2018 should also reduce the pressure for an interest rate rise.’
However, Michael Saunders, a member of the MPC, recently stated that a ‘modest’ rise in interest rates is needed to ‘curb inflation’. Mr Saunders said that a rise would also ‘help ensure a sustainable return of inflation to target over time’.