2018 Rate Hike Delayed Not Cancelled

The Bank of England has maintained the bank rate at 0.5%. I give my view on the decision.

“It looks like the 2018 rate hike has been delayed not cancelled. The MPC are quite dismissive of Q1 growth weakness and maintain their view that the economy has little slack. But the area that is probably giving them most
Fitch Ratings’ Chief Economist, Brian Coulton
grounds for pausing is the recent weakening in consumption indicators, which could be flagging a bigger downside risk to the growth outlook. The deterioration in UK household finances over the last couple of years — with an unprecedented shift into a financial deficit in 2017 — poses risks to consumer spending as credit availability tightens.”

See the Fitch Ratings’ Economics team’s latest research: UK Household Finances Pose Risk to Growth, Consumer Loans