Bank keeps interest rates unchanged…for now

Link: Bank pushes up rates to 4.5%

Commenting on the decision, Andrew Smith, KPMG’s chief economist said: ‘Having raised rates in both May and June, the MPC has shied away from a third consecutive increase, but the pause is likely to be brief. Everyone will now pencil in a rise next month.’

Smith said the economy was well on track to beat growth targets and predicted interest rates would hit 5% to 5.5% by the end of the year.

‘Given robust growth, there is an argument that the sooner rates return to their “neutral” level, where they neither stimulate nor depress the economy, the better. A rise in August would leave rates on track to move into the 5 – 5.5% range, estimated by some to be the neutral level, before year-end,’ he added.

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