A range of new economic factors may help decide whether interest rates will go up or down next week
The Bank's Monetary Policy Committee will meet on Thursday, May 9, to decide whether they will increase interest rates, decrease them, or keep them the same. Currently, interest rates have been frozen at 5.25 per cent and have remained at that level for the past few months.
Consumer Price Index inflation dipper to 3.2 per cent in March and is expected to move closer to the Bank's 2 per cent target rate in April, following another drop in energy prices. Meanwhile, according to the British Retail Consortium, the latest annual shop price inflation slowed to 0.8 per cent in April, compared to 1.3 per cent in March.
Ashley Webb, UK economist at consultancy Capital Economics said: "The fear is that the rise this year will contribute to stickier wage growth and inflation.” He said: "Following accusations that policymakers were behind the curve in tightening policy when inflation was heading up, the MPC may well decide it’s appropriate to exercise further caution in bringing rates down. Assessing the effect of April’s large rise in the national living wage on broader pay growth offers another reason for inaction for the time being.”
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