Economic boost puts pressure on Mark Carney over interest rates
Readings will make it hard for Canadian to fulfil his pledge to keep rates on hold until 2016
Record survey readings from all three main sectors of the UK economy in August will make it harder for Bank of England Governor Mark Carney to fulfil his pledge to keep rates on hold until 2016, City economists said today.
“We expect the Bank to be forced into tightening monetary policy well before the date that they are currently suggesting,” said James Knightley of ING. The Markit/CIPS composite purchasing managers index, which covers services, manufacturing and construction, rose to its highest ever last month.
The Bank’s monetary policy committee was meeting today to decide on whether to restart quantitative easing, and its decision will be announced tomorrow. Carney said last week that if UK financial conditions continued to tighten, threatening growth, the Bank would consider injecting more stimulus.
Since Carney made his “forward guidance” pledge of low rates a month ago, money markets have moved in the opposite direction, with traders bringing forward their expected date for rate rises to the middle of 2015.
The pound has also risen against the dollar in response to the flow of strong economic data. Sterling gained further after yesterday’s services survey, rising to $1.5603.
However, Alan Clarke of Scotiabank said the market view on the timing of the first rate rise showed Carney’s pledge was working. “Were it not for forward guidance, we would be seriously considering forecasting a hike next year” he added.
- 1 What happens to your body when you give up sugar?
- 2 Ed Miliband deemed less influential than One Direction's Louis Tomlinson by official Doncaster power list
- 3 Japanese island overrun with cats after population explodes
- 4 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
California teacher appears to have hanged herself in her classroom
The City of the Monkey God: Archaeologists claim to have found city lost for 1,000 years in remote Honduran jungle
Ed Miliband deemed less influential than One Direction's Louis Tomlinson by official Doncaster power list
Japanese island overrun with cats after population explodes
Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Durham Free School: 'Creationism taught at' free school facing closure
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...
£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...