Mark Carney is set to announce the Bank of England’s inflation forecasts in a press conference on Thursday, giving way to speculation that an interest rate hike is close.
City traders are calling the day ‘Super Thursday’, as at least two or three of the nine members of the Bank of England’s interest rate-setting committee are expected to vote for a rate rise for the first time since 2007. Interest rates were cut to a low of 0.5% in 2009 in an effort to stimulate the economy after the financial crash.
However, the strength of sterling is causing disagreement among its policymakers over when is the right time; the pound hit its highest level in over seven years against the currencies of Britain’s main trading partners last month.
David Miles, another independent monetary policy committee member, whose term is about to end, said in a speech last month it was time to start to bring rates back towards normal levels, from their record low of 0.5%. “The time to start normalisation is soon; that is not something to shrink from,” he said.
However with inflation at zero, Andy Haldane, the Bank’s chief economist, said in a recent interview with the Guardian that “there is no rush to move rates from where they are right now.”