Bank Of England Rate Hike Likely To Be Delayed To August


The timing of the next interest rate hike by the Bank of England is likely to be delayed to August, because of the dip in economic performance, the National Institute of Economic and Social Research said Friday.

Nonetheless, the think tank said the Monetary Policy Committee will remain on a gentle path of monetary policy normalization.

The economy is forecast to grow 1.4 percent in 2018 and 1.7 percent next year. The institute projected 1.8 percent growth for 2020.

In February, the NIESR had projected 1.9 percent growth each for 2018 and 2019.

Although the economic growth eased to 0.1 percent in the first quarter, the think tank said this weak outturn doesn't represent a prolonged period of slow growth.

Further, the think tank said although the UK government and the EU have made progress with a transition agreement, there is still a risk that talks fail and the UK ends up trading under WTO rules after 'Brexit'.

The possibility of these events represents a downside risk for the latest GDP growth forecast and an upside risk for inflation forecast.

The think tank forecast 2.1 percent inflation for this year and 2 percent next year.