Low inflation 'may not prevent rate rise'
The base rate may yet rise this year, despite minimal inflation, according to one economist.
The UK financial sector has spent much of the last few years dealing with false alarms about possible base rate rises, which are often predicted a few months down the line without actually materialising.
Last year was a case in point, chiefly because the minutes of Bank of England Monetary Policy Committee (MPC) meetings hinted that some were wavering on holding at 0.5 per cent.
Convictions that change was on the way were further fuelled by minority support for a rate rise (by Ian McCafferty and Martin Weale) that continued until this month, as well as talk by governor of the Bank Mark Carney that rates could reach around 2.5 per cent by 2018.
Such possibilities have been considered before. In 2011, for instance, as many as three members supported a rate hike. However, just as in the MPC meeting this month, the committee has eventually reverted back to its unanimity for a rate hold.
Despite this, 2015 may yet see a rate rise, according to Schroeders economist Azad Zangana. Reflecting on the data that showed economic growth slowing to 0.5 per cent, he said the overall economic performance actually remains strong, once the impact of reduced oil revenues is taken into account.
He added that it is possible inflation may turn negative, which might be seen as a good reason to stick with the 0.5 per cent base rate. However, Mr Zangana noted: "Governor Mark Carney has warned that the Bank has the ability to look through short-term moves in inflation, and so may yet consider raising interest rates by the end of the year."
This assertion may be backed by recent history, albeit under Mr Carney's predecessor, Sir Mervyn King. After all, the MPC has previously 'looked through' high inflation to keep the rate at 0.5 per cent with wider economic imperatives in mind.
So for the financial sector, a response to changes in interest rates may yet be required this year, even if the low oil price keeps inflation down or even brings deflation.
Signup to receive the latest discipline specific articles
Related articles
Teaser
Finance & AccountingContent Type
General
25/04/24
Summary
Over the years, we have developed a strong reputation as a leading Senior Finance and Executive Search firm. We’re proud to have well-established teams of finance and accounting recruitment cons
by
Neil Burton
Teaser
GovernanceContent Type
Fintech
18/04/24
Summary
The role of risk and compliance in financial services As a sizeable, growing portion of the financial services sector, risk and compliance play a vital role in ensuring that firms conduct busine
by
David Clamp
Teaser
Executive SearchContent Type
General
18/04/24
Summary
Private equity (PE) is a growing industry that has always attracted ambitious top talent due to its high risk/high gain capital investment. Pre-covid, we saw the global private equity industry b
by
Tracey Alper
Related jobs
Salary:
£150,000 - £175,000 per annum + Equity, Bonus and Benefits
Location:
West Midlands
Industry
Business Services
Qualification
Fully qualified
Market
Executive Search
Salary
£175,000 - £250,000
Job Discipline
Private Equity Executive Search
Contract Type:
Permanent
Description
Marks Sattin executive search is working with a PE-Backed Environmental services business
Reference
TA 3255
Expiry Date
01/01/01
Author
Executive SearchAuthor
Executive SearchSalary:
£150,000 - £170,000 per annum + Equity, bonus and benefits
Location:
Essex
Industry
Business Services
Qualification
Fully qualified
Market
Executive Search
Salary
£125,000 - £175,000
Job Discipline
Private Equity Executive Search
Contract Type:
Permanent
Description
Marks Sattin Executive Search is working with a PE-backed multisite product-led distribution business
Reference
TA 3252
Expiry Date
01/01/01
Author
Executive SearchAuthor
Executive SearchSalary:
£150,000 - £175,000 per annum + Equity, Bonus and Benefits
Location:
Yorkshire and the Humber
Industry
Business Services
Qualification
Fully qualified
Market
Executive Search
Salary
£175,000 - £250,000
Job Discipline
Private Equity Executive Search
Contract Type:
Permanent
Description
Marks Sattin Executive Search has an exciting opportunity for a CFO to join a PE Backed infrastructure business
Reference
TA 3253
Expiry Date
01/01/01
Author
Executive SearchAuthor
Executive SearchSalary:
£120,000 - £140,000 per annum
Location:
London
Industry
Professional Services
Qualification
Fully qualified
Market
Financial Services
Salary
£125,000 - £175,000
Job Discipline
Legal
Contract Type:
Permanent
Description
Corporate Associate (5+ years PQE) London £120,000- £140,000
Reference
BBBH180149
Expiry Date
01/01/01
Author
Elliott KayeAuthor
Elliott KayeSalary:
£40,000 - £45,000 per annum
Location:
Leeds, West Yorkshire
Industry
Business Services
Qualification
None specified
Market
Financial Services
Salary
£40,000 - £50,000
Job Discipline
Tax
Contract Type:
Permanent
Description
.
Reference
BBBH180144
Expiry Date
01/01/01
Author
Aleksandra TaranovskajaAuthor
Aleksandra TaranovskajaSalary:
£27,000 - £30,000 per annum
Location:
Leeds, West Yorkshire
Industry
Pharmaceuticals & Life Sciences
Qualification
None specified
Market
Commerce & Industry
Salary
£30,000 - £35,000
Job Discipline
Part Qualified & Transactional Finance
Contract Type:
Permanent
Description
Marks Sattin are currently recruiting a Senior Credit Controller on behalf of a well established £100million turnover business, based on the outskirts of Leeds City Centre.
Reference
BBBH179713
Expiry Date
01/01/01
Author
Yasmin CloughAuthor
Yasmin CloughSalary:
£60,000 - £70,000 per annum
Location:
London
Industry
Property and Infrastructure
Qualification
Fully qualified
Market
Commerce & Industry
Salary
£70,000 - £80,000
Job Discipline
Newly Qualified Finance
Contract Type:
Contract
Description
Interim Accountant required for a well established Property Group!
Reference
BBBH178975
Expiry Date
01/01/01
Author
Jaden AlieAuthor
Jaden AlieSalary:
£35,000 - £50,000 per annum
Location:
Grimsby, Lincolnshire
Industry
Manufacturing
Qualification
None specified
Market
Financial Services
Salary
£50,000 - £60,000
Job Discipline
Part Qualified & Transactional Finance
Contract Type:
Permanent
Description
Our Grimsby based food manufacturing client is looking for someone experienced in product costing to join them as a Costing Manager.
Reference
BBBH179883
Expiry Date
01/01/01
Author
Dean FollandAuthor
Dean FollandSalary:
£400 - £500 per day
Location:
City of London, London
Industry
Real Estate
Qualification
Fully qualified
Market
Commerce & Industry
Salary
£350 - £450
Job Discipline
Qualified Finance
Contract Type:
Contract
Description
Our client is a reputable real estate firm seeking an experienced Interim Senior Financial Consultant on an interim to perm basis for an initial 6 month basis!
Reference
BBBH179895
Expiry Date
01/01/01
Author
Jaden AlieAuthor
Jaden AlieSalary:
£26,000 - £29,000 per annum
Location:
Leeds, West Yorkshire
Industry
Business Services
Qualification
None specified
Market
Commerce & Industry
Salary
£25,000 - £30,000
Job Discipline
Part Qualified & Transactional Finance
Contract Type:
Permanent
Description
Credit Controller role in Leeds!
Reference
BBBH179637
Expiry Date
01/01/01
Author
Cameron WalshAuthor
Cameron Walsh