Global economic concern leads Bank of England vote to maintain interest rate
Since March of 2009, interest rates have remained at 0.5%, however Governor Mark Carney has warned of a possible hike in the near future. Economists have estimated the hike to come no quicker than the first half of 2016, concerns have grown over the current state of the global economy with major signs of a slowdown at home.
Ian McCafferty, an official for the monetary policy committee, has individually voted for a rise in interest rates. Many analysists will be keeping an eye out to see if he gains any supporters during this month.
The international monetary fund cut its global growth forecasts yesterday to the lowest level in 6 years, they touched on the slowdown of the economy in China and whether the United States will take the step to raise interest rates before the end of 2015.
World growth has been predicted by the IMF at 3.1% this year, which is just under the prediction of 3.3%.
However recent economic data in the UK has showed a slowdown in growth this quarter. A key purchasing manager report for the services sector in the UK which came through on Monday indicated that Britain 's main sector is growing at the weakest level recorded since April of 2013.
There was also a big slowdown in manufacturing when compared to last year, as exports were struck with a low demand and a strong pound, despite industrial production improvements.
Many economists have not hidden their concerns regarding the sustainability of the recovery of the UK, this is because it is currently driven on by the money brought in from consumers, other than selling the goods and services we have to offer abroad.
The IMF have in fact increased the forecast for the countries growth by 0.1% to 2.5% this year starting from July. With the projections for the next year unchanged, they remain at 2.2& growth.
Western Union Business Solutions market analyst Nawaz Ali said "Despite the various political party conferences claiming that our economy is in a stronger position than ever, the MPC vote split is likely to remain unchanged at 8-1, as the World Bank and IMF downgrade world growth forecasts and "external factors" continue to deteriorate."
He also said that the decision from the banks not to hike rates yet, does not bode well for the pound, he went further saying he expects it to weaken further up against the euro in the next few months.
Investment Director for Aegon UK, Nick Dixon said "Revised guidance on the timeframe for future increases will be of greatest interest. With recent "low-flationary" headwinds including stagnant CPI and muted consumer confidence, the first rate hike may well be pushed back into the second half of 2016."
When it comes down to interest rates, the banks have been sending out mixed signals, a lot of concern has come from policymakers over the current state of the world 's economy.