BANK OF ENGLAND SET FOR RATE HIKE?
Investors become increasingly confident of an increase on Aug 2
BANK of England (BoE) policymakers are adjusting to an upheaval at the statistical office at the very point when they need as much clarity as possible to help decide whether to raise interest rates next month.
The United Kingdom Office for National Statistics (ONS) is this week shaking up the way it reports growth, publishing monthly updates and delaying its usual quarterly figures.
The new process method comes after most policymakers said last month they were prepared to wait to see how the economy evolved before hiking rates — a move investors and economists now expect them to make next month.
While the new system means that BoE officials won’t have an estimate for second-quarter growth when they next meet, said governor Mark Carney last week that he was “serene” about the change.
That may be in part because the BoE has previously questioned the accuracy of ONS estimates, relying instead on its own analysis.
Investors are pricing in about an 80 per cent probability of a rate hike on August 2.
Asked last week whether the BoE would have enough information to make a decision next month, Carney said “the short answer is yes”.
The ONS started producing monthly estimates yesterday, based on data for services, production and construction. Economists expect it to show the economy expanded 0.2 per cent in the three months through May.