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Interest rate predictions - Greece

Interest rate predictions – The Greek Effect

 

The market predicts the first rise in the UK Bank Rate around May or June 2016 with the consensus of economist views pointing to March. The market has shifted a little since the end of May when trading suggested the first increase would come in August or even September. Since then the UK has swung back out of its brief spell in deflation (-0.1pc CPI back to +0.1pc).

Also, the monetary policy committee has been voting unanimously to keep rates on hold but last week Martin Weale, a committee member, suggested he may soon break ranks and call for a rise.

But Paul Hollingsworth of Captial Economics said: "Even if one or two members vote to raise rates, we doubt that this will be a sign that the tide is turning.

With Greece’s No vote the pressure to hold rates may remain.

 

"Indeed, with concerns about Greece likely to linger, inflation to remain low by past standards and plenty of spare capacity left in the economy, we think that the MPC can hold off from raising interest rates until Q2 (April-June) next year."

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