In May 2018 CPI (Consumer price index) remained unchanged at 2.4% according to www.ons.gov.uk
This is leading to industry speculation that interest rates will remain unchanged until later in the year or into 2019 We asked our Fund Manager John Vailes what he thought;
‘With UK interest rates still at 0.50%, the Bank of England (BoE) is likely wanting to hike rates in the summer. However, the Monetary Policy Committee (MPC) minutes from June’s meeting showed us that the members were no longer voting unanimously in the direction of travel for short-term interest rates following data which showed inflation held firm at 2.4%, and an unexpected slowdown in wage growth.
For a rate hike to be likely, we would expect the rising price of oil and recent weakness in the pound to increase headline inflation in the short-term, and it is for this reason that MPC members would be questioning what is the correct policy. Inflation has been falling away gradually from its five-year high of 3.1% in November as the effects of the fall in the value of sterling after Brexit begin to ease. If the UK can shrug off a weak 1st Quarter and show signs of growth between now and August, I believe the members of the MPC will then have enough data to push ahead with a rate hike. ‘
If you would like to discuss how this could affect you personally, please call us on 01202 676983.
