While high inflation, low unemployment and stable growth would usually prompt the
“Uncertainty over how Brexit talks will pan out means that the MPC won't want to make a strong commitment regarding the timing of the next rate hike,” said
With the next stage in the Brexit discussions with the
Despite a lack of clarity over
There's been no recession — not even close — partly because the fall in the pound helped boost exports, particularly to the 19-country eurozone, which is currently in the midst of its strongest upturn in a decade.
In the final three months of 2017, the British economy grew by a quarterly rate of 0.5 percent, a better than expected outturn that means it expanded by 1.8 percent overall last year. While slower than the neighboring eurozone or the
As a result, many in financial markets are predicting the
Last November, the
Though above-target inflation is likely to remain a key feature during this week's interest rate deliberations, it's not expected to result in another hike. Carney will likely buy time by stating that the recent firming of the pound to over
The biggest complication for rate-setters is Brexit-related. With the minority governing
On Monday, a closely watched survey of business activity in the manufacturing, construction and services sectors fell to its lowest level since
“Brexit continues to be mentioned as a source of uncertainty, and that's likely to persist over coming months until there is greater clarity on the future trading relationship,” said
Should some certainty re-emerge by the springtime, in the form of a Brexit transition deal, the case for a rate hike would grow.
But the current infighting in the British government suggests we're nowhere near there yet.