Commenting on the Bank of England’s decision to hold interest rates at 0.1%, Melanie Baker, Senior Economist at Royal London Asset Management said:
“Despite Governor Bailey revealing that today’s interest rate decision was a “close call”, the Bank of England has decided to keep rates on hold. However, they signalled a rate rise in coming months if the economy evolves as they expect.
“The Bank’s forecasts and comments sound consistent with a rate rise in February 2022, with some probability of a December 2021 hike, as the picture becomes much clearer on what has happened to the UK labour market following the end of the furlough scheme.
“However, the forecasts and commentary also confirm that it doesn’t make sense at this stage to expect a rate rise in coming months to mark the start of any rapid tightening of monetary policy.”
The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.