Mark Carney – May rate rise less likely

Following the latest inflation figure decrease to 2.5%, and softer economic data, Mark Carney has indicated that the Bank of England Monetary Policy Committee (MPC) are less likely to increase the Bank Base rate from 0.5% when it next meets on the 10th of May.

Mark Carney was talking to the BBC at the IMF Spring meeting and said: “We have had some mixed data. On the softer side some of the business surveys have come off. Retail sales have been a bit softer, we are all aware of the squeeze that is going on in the high street.”

“We’ll sit down calmly and look at it all in the round. I am sure there will be some differences of view, but it is a view we will take in early May conscious that there are other meetings over the course of this year.”

“Most recently it has been the uncertainty around Brexit that has prevented what would otherwise have been a surge in investment in this economy akin to the big pick ups in business investment we have seen in other economies.

“Since the start of 2016 up until now we have seen much less investment than would have expected. Unfortunately that means in the short term that the speed limit is not increasing. Productivity is not increasing, which will limit the rate at which people’s wages can pick up.”

It was widely discussed by economists in the press that recently increasing wage inflation would put pressure to vote for a rate rise at the next (MPC) meeting, but the latest inflation figures could defer any decision.

Mark Carney is still warning that interest rate rises are likely to happen later this year, but they will be gradual and affected by the outcomes of the Brexit Negotiations.

Therefore, from Bank forecasts Landlords with variable rate mortgages are unlikely to need to factor in more than a 1% rate rise from the current 0.5% figure over the next two years.