Phase two of forward guidance won’t hasten rate hikes

The Monetary Policy Committee’s decision on Thursday 8th May will be the first to be taken under the second phase of forward guidance. But we don’t expect that to have much of a bearing on its deliberations. With inflation falling further below target in March and first quarter GDP growth disappointing the MPC’s expectations, another no change decision would appear to be a given. And we still believe that interest rates will not need to rise until well into 2015.