MPC to wait for evidence that slowdown is temporary

While the MPC thinks that the economy’s slow start to the year should prove temporary, it sees the costs of waiting a few more months to be sure as being relatively low. As a result, we still expect the next hike in interest rates to come in August. And if we are right in thinking that GDP and pay growth will pick up faster than it forecasts, then rates are likely to rise by more than markets expect over the next few years.