The City A.M. Shadow Monetary Policy Committee votes to hold rates steady

Share Chair: Mark Wall – Deutsche BankHOLD The Bank is at the limits of tolerating above-target inflation, but there is a case to be made for maintaining the neutral policy bias. The Brexit forecast error may be about to resolve itself as evidence of the real income shock and business relocations begin to appear. The cost of a policy mistake may be asymmetric too. With the latest quantitative easing tranche wrapping up this month, the BoE has all the more reason to proceed slowly as the post-referendum monetary stimulus unwinds.Kallum Pickering, BerenbergHOLD But send a strong signal that monetary policy will tighten in the coming months amid strong growth and rising household debt.James Sproule, Institute of DirectorsHIKE Reverse post-Brexit reduction and establish path to normalisation. This will help interest rate spreads to widen, reflecting actual risk and ideally helping the asset bubble to deflate.Vicky Pryce, CEBRHOLD Although inflation is rising and GDP data are better than originally forecast, growth remains unbalanced and the risks of a hard Brexit add to the short- and medium-term uncertainty.Simon Ward, Henderson whatsapp At their last monetary policy meeting the Bank predicted inflation to rise to above 2.7 per cent next year, with a consequent slowdown in consumer spending and UK GDP growth. The City A.M. Shadow Monetary Policy Committee votes to hold rates steady Jasper Jolly The BoE has previously stuck to a “neutral bias” on interest rates, with room to move monetary policy either way.Read more: No fireworks: Economists say BoE and Fed set to hold rates next weekCity A.M.’s Shadow MPC has voted in favour of holding rates again, although with a slight shift in bias towards tighter policy.The last change in monetary policy came in August in response to the Brexit vote, with a cut in the bank rate from 0.5 per cent to 0.25 per cent and an extension of quantitative easing (the asset purchase programme of bond buying) by £60bn in government bonds and £10bn from corporates. Since then the UK economy has proven remarkably resilient.The Bank may come under increasing pressure to raise interest rates over the coming months as the devaluation of sterling passes through to consumers in the form of higher prices. HIKE by 25 basis points. The August stimulus package was unnecessary, as monetary trends argued at the time. With GDP, inflation and wage data surprising to the upside, now is the time to start reversing it.Ross Walker, Natwest MarketsHOLD Higher than expected GDP growth and consumer price index (CPI) inflation outturns probably justify unchanged policy settings, but the medium-term risks for both remain firmly to the downside so I retain an easing bias.David Stubbs, JP Morgan Asset ManagementHOLD Rates should be kept on hold for the time being. There are early signs of weakness in UK consumer data, which make up 60 per cent of UK GDP. Retail sales in December fell 1.9 per cent month-on-month, the biggest decline in four and half years.Ruth Gregory, Capital EconomicsHOLD Next move in interest rates will probably be up. But heightened uncertainty around the economic outlook and little sign of rising domestic inflationary pressures suggests this is some way off.Simon French, Panmure GordonHOLD There are signs of moderation in the unsustainable pace of consumer borrowing. This, alongside Sterling’s recent resilience, means bank policy can remain on hold until more detail is available on Article 50 negotiations and the path of inflation.Adam Chester, Lloyds Bank Commercial BankingHOLD Rising inflation and the resilience of the economy mean that the case for sustaining last year’s emergency rate cut has weakened. Still, it remains too early to reverse course given the economic uncertainty. The Bank of England (BoE) is expected to leave interest rates and its quantitative easing policy unchanged at the latest meeting of the rate-setting Monetary Policy Committee (MPC).Most economists expect serious talk of a rate rise to be reserved until the latter half of the year at least – and the possibility remains of a further cut to the bank rate if the economy reacts badly to the process of leaving the EU. whatsapp by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeBetterBe20 Stunning Female AthletesBetterBeAtlantic MirrorA Kilimanjaro Discovery Has Proved This About The BibleAtlantic MirrorWarped SpeedCan You Name More State Capitals Than A 5th Grader? 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