CBI UK Economic Update
09 Feb 2017
- Last week’s “Super Thursday” releases from the Bank of England saw no change in the stance of monetary policy – with a unanimous vote to leave interest rates (at 0.25%) and quantitative easing unchanged.
- But the Bank upgraded its outlook for economic growth, particularly strongly so in 2017 – mostly taking account of announcements in November’s Autumn Statement and a firmer outlook for the global economy.
- On the surface, a better growth outlook coupled with higher inflation may be interpreted as raising the likelihood of a rise in interest rates ahead.
- But the Bank’s language on monetary policy remained largely neutral, emphasising scope to respond in either direction to economic developments (albeit with some hawkish undertones).
- Minutes of the MPC’s meeting suggests that movements in wage growth, household spending and sterling’s impact on inflation (all relative to the Bank’s current expectations) would be key in swaying the Committee either way.