Policymakers at the Bank of England are to keep interest rates steady this week as economic growth has sharply slowed down.
The Monetary Policy Committee (MPC) are expected to keep rates at 0.75% on Thursday’s noon decision, after figures show the economy has shrunk by a staggering 0.4% in April.
Should the government secure a smooth Brexit then the MPC are wanting to raise interest rates.
Inflation has increased to 2.1% in April against 1.9% in March.
Howard Archer, chief economic adviser to the EY Item Club said, “April’s sharp dip in GDP and soft May surveys reinforces belief that the Bank of England will maintain a cautious “wait and see” approach on interest rates amid heightened economic, political and Brexit uncertainties.
“We believe the Bank of England is likely to keep interest rates at 0.75% through 2019.”
Philip Shaw at Investec added, “With no urgency to tighten policy again, the committee would probably want to avoid making a policy move now which it might well have to reverse relatively soon afterwards.”