Rate hike excitement could cool, says HARVEY JONES
THE DEBATE over whether to increase base rates is finally getting interesting.
The Bank of England slashed rates to 0.5 per cent in March 2009
In the 100 months since the Bank of England slashed rates to 0.5 per cent in March 2009, there has been little to get excited about.
Near-zero rates were supposed to be temporary, but the Bank's Monetary Policy Committee has moved just once since, and that was to cut rates to 0.25 per cent last August in a fit of post-Brexit panic.
Suddenly, the committee has woken up.
Earlier this month three of its eight members turned hawkish, shocking markets out of their interest rate stupor by voting for an increase.
Interest rates could be increased in August
Mark Carney warns time is not right for interest rate rise
Bank Governor Mark Carney tried to put the debate back to bed by saying this was not the right time given "anaemic" wage growth and Brexit uncertainty, only to see it flare into life again last week.
The Bank's chief economist Andy Haldane is the latest convert to the cause of higher rates, saying they need to rise "relatively soon".
A rate hike would concern British exporters as it would drive up sterling and make their goods pricier for global customers.
Bank of England Governor Mark Carney tried to put the debate back to bed
UK exporters have significantly outperformed their EU counterparts since the referendum, according to accountants BDO, and would hate to lose this tailwind.
I suspect the inflation spike is temporary, driven by sterling's slump and the oil price rebound, now going sharply into reverse.
Recent rate hike excitement could cool just as quickly as it bubbled up, frustrating savers again.
Back to sleep, everyone.