Interest rates will not rise until 2019, economist say  

Here’s why

Interest rates will not rise until 2019, despite inflation remaining above target, according to economists.

According to the snapshot of economists’ views carried out by the BBC they believe that the Bank of England’s Monetary Policy Committee (MPC) will be reluctant to raise rates during Brexit negotiations.

Half of the economists the BBC contacted said they think wages growth will outpace inflation in the first half of 2019.  In July Inflation stood at 2.6 per cent well above the Bank’s official target of two per cent.

The base rate has remained at a record low of 0.25 per cent since August 2016 when the MPC lowered the rate for the first time in seven years.

Last week, MPC member Michael Saunders, said a “modest rise” in rates was needed to control inflation.

Stuart Green, of Santander Global Corporate Banking, told the BBC that he did not expect a rate rise was until 2019.

“We believe that policymakers will be reluctant to tighten monetary policy until greater clarity emerges around the UK’s post-EU trading framework, and our expectation of declining inflation through 2018 should also reduce the pressure for an interest rate rise,” he said.

However other economists believe it will it be even longer. Economists at Morgan Stanley do not expect any movement until March 2019 at the earliest. While Andrew Goodwin at Oxford Economics suggests no rises will happen until the third quarter of that year.