Rates on hold for a long time yet

With November’s Inflation Report indicating favourable prospects for growth and inflation, there is little reason for the MPC to change course on policy. And while unemployment may be falling more rapidly towards the 7% way station than the MPC expected, Committee members have been at pains to emphasise the “threshold, not a trigger” point frequently stressed by Governor Carney. Meanwhile, action to cool household lending with macro-prudential tools has further reduced the likelihood of an early rate hike. Accordingly, interest rates will be on hold for a long time yet.