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Interest rate rise likely to be delayed further, hints key Bank of England figure

One of the leading members of the Bank of England's influential Monetary Policy Committee has suggested that the recent fall-back in the growth of earnings might be a good reason to delay any interest rate rise.

Martin Weale, who is also a director of the National Institute of Economic and Social Research, says he is surprised at the "pause" in wage growth over the past six months or so.

Weale is widely considered to be aggressive on interest rates, having previously appeared more likely than many other MPC members to increase them. Therefore his remarks, made in an interview in The Daily Telegraph, are being taken as an indicator that any increase may be edging further into 2016.

"Weale's comments are particularly noteworthy as his voting record on the MPC has been at the hawkish end" says Howard Archer, chief European and UK economist at financial consultancy IHS.

Three other MPC members have in recent weeks suggested that wage growth has become too low to commend an imminent increase in the current 0.5 per cent base rate.

  • Kelly Evans

    Can't see an interest rate rise in 2016. I'm thinking 2017, if not 2018.

    Rob  Davies

    Yes, have to agree with this. Terrible news for savers, excellent news for those with mortgages. Surely interest rates will have to rise at some point, though, which is when the problems could start in earnest.

  • Richard White

    They're bound to rise next year and I'd wager sooner rather than later. The BOE know that all the time they stay where they are, the system is being further poisoned by free money and debt that will either take forever to repay or won't get repaid at all.

    The Americans have recognised that the move had to be made and have taken the first step. There will obviously be a myriad of issues when rates do rise, but to hide from it any longer is to risk an event that will make the 2007/8/9 crunch look like the global equivalent of losing a few quid down the back of the sofa. We should all be hoping it's done and done sooner rather than later.

    Rob  Davies

    But they keep putting it off every few months. What makes you think it will be any different in 2016? Osborne and the Tories know that the economy is not in as rude a health as they would have us believe. The smallest little thing could knock it off course and plunge it into recession. Much better to keep interest rates historically low than have to deal with the issues that will be caused from it.

    Rob  Davies

    *Caused from raising interest rates.

    Algarve  Investor

    Debt has risen to absurd levels under this government, but that doesn't seem to get mentioned much. I agree that interest rates should be raised sooner rather than later, but I have severe doubts about whether that will happen. I think the BoE are being very cautious and will continue to be very cautious while the world economy - thanks to low oil prices and uncertainty over Europe - is still unstable. I just can't see Carney & Co taking such a big risk, can you?

    Richard White

    The point is, Rob, that if it doesn't happen now, there will be no dealing with the consequences later. Have you looked at the statistics for global debt?

    If the wheels aren't put in motion swiftly, the 'issues' will be so enormous that there will be no way of dealing with it. Think Iceland 2008, on a global scale. That's where it will go.

    Yes, pushing rates up may well nudge us towards flat growth or even negative growth but that is far, far better than an uncontrolled collapse of the banking system and the global economy triggered by insurmountable debt and widespread loss of confidence in the system.

  • icon

    Most prudent borrowers will be able to live with a gradual rise of say, 1-2% over the next few years. The danger is that there will be panic at some time and the BoE will over react?


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