Ashton Whiteley economists say BoE will hike interest rates once or twice a year as long as UK wage growth recovery continues.
SHANGHAI, CHINA, April 06, 2018 /24-7PressRelease/ — Last week, Bank of England policy maker, Gertjan Vlieghe, stated that borrowing costs will likely need to be increased once or twice a year for the next several years. Ashton Whiteley economists believe Vlieghe’s comments will confirm investors’ expectations of another rate increase in May.
Vlieghe’s comment came after two of his peers voted to increase borrowing costs this month. Vlieghe said he was confident that inflation pressures were growing in the UK’s economy.
Vlieghe added that as long as a robust global economic recovery helps the UK to offset the negative consequences of the Brexit referendum of 2016 and salary growth remains strong, the Bank of England will continue to raise interest rates at least once or twice a year.
Last Thursday, the Bank of England left interest rates unchanged at 0.5 percent, but two of the nine rate setters voted in favor of an immediate increase. Ashton Whiteley economists believe this strongly suggests that the BoE will hike rates in May for only the second time in over a decade.
Vlieghe said recent data had indicated that there was a recovery in salary growth underway in the UK.
This week, official data revealed that worker’s pay had accelerated at its fastest pace in more than 2 years in the period from November to January.
Ashton Whiteley economists believe that weaker output growth will create a new standard for wage growth of around 3 percent, instead of the previous 4 percent.
Last year, the global economy showed strong economic growth and recovery and helped the UK to mitigate uncertainty caused by Brexit. However, Ashton Whiteley economists pointed out that the possibility of a global trade war has emerged as a new threat to the world economy.
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