Advertisement

Are higher interest rates coming soon?

The first interest-rate hike in eight years could be moving closer.

751-shopper-634
Pick up a bargain: clothes prices have fallen

The annual rate of UK consumer price index (CPI) inflation fell back to 0% in June from 0.1% the month before, thanks mainly to lower clothing and food prices. Core CPI, which excludes volatile food and energy prices, declined to 0.8%, the weakest since 2001.

Meanwhile, the unemployment rate edged up for the first time in two years, climbing from 5.5% to 5.6%. The claimant count, meanwhile, saw the first uptick since 2012. Pay growth remained encouraging, however, rising to an annual pace of 3.2% in the three months to May. Excluding bonuses, the rate was 2.8%, a six-year high. Bank of England Governor Mark Carney said recent data had been slightly stronger than expected and the first interest-rate hike in eight years was "moving closer".

What the commentators said

Throw in solid survey data, and it looks as though the uptick in unemployment we saw this week could well be a blip, says Vicky Redwood of Capital Economics. "Surveys of employment intentions remain consistent with a decent rate of jobs growth."

Advertisement - Article continues below

While the more hawkish members of the Bank of England's rate-setting committee will probably vote for a rise in August, the rest will want to see inflation head back to the 2% target before going for dearer money, reckoned James Knightley of ING Financial Markets. Don't expect the first hike until February 2016.

Advertisement
Advertisement

Recommended

Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/economy/uk-economy/601605/spend-spend-spend-think-of-it-as-your-patriotic-duty
UK Economy

Spend, spend, spend – think of it as your patriotic duty

After months of lockdown, many of us will have some money to spare. If you do, says Merryn Somerset Webb, spend it.
2 Jul 2020
Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/economy/uk-economy/601557/uk-australia-trade-deal
UK Economy

Why the UK should be gunning for a trade deal Down Under

It might seem a minor matter compared with Brexit, but a trade agreement with Australia is a big deal
28 Jun 2020

Most Popular

Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020
Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/investments/commodities/gold/601587/bullish-gold-price-cup-and-handle-chart-pattern
Gold

This chart pattern could be extraordinarily bullish for gold

The mother of all patterns is developing in the gold charts, says Dominic Frisby. And if everything plays out well, gold could hit a price that invest…
1 Jul 2020