Daily Management Review

BoE’s Rate Hike On The Cards Worries Economists After The Recent Data On British Economic Performance Of 2017


02/22/2018


Even though, the British economy outperforms the initial blows of Brexit, the performance still keeps the country “lagging” behind in “global recovery”.



According to “official data”, the British economy turned “weaker” than previous expectations in the year of 2017, whereby the country remains “lagging further behind” in the journey to “global recovery” amid the Brexit preparations.
 
The downward graph of year round performance culminating in the “fourth-quarter growth rates” put the British economic strength under question, while the BoE is preparing the ground for hiking “interest rates”.
 
Moreover, the growth of GDP also “slowed to a quarterly 0.4 percent” in comparison to an earlier estimation of “0.5 percent”, whereby further bringing the whole economic growth to “1.7 percent”, which also marks to be the “lowest since 2012”. However, the said performance happened to be “stronger” than the feared expectations of economists following Britain’s vote in favour of exiting the EU.
 
While, Reuters added:
“But the country has relied heavily on the unexpectedly robust global economy to sustain its economic growth while consumers have been squeezed by higher inflation caused by the fall in the pound after the Brexit vote”.
 
Scotiabank’s economist, Alan Clarke stated that the figures, thus mentioned, the British economic growth was almost at the “pace” seen by BoE for its “new, lower speed limit”, which means that the bank is still looking at “rate hike” as an option.
 
However, the Pantheon Macroeconomics’ Samuel Tombs said:
“The latest GDP data suggest that the economy remains in a fragile state and does not need to be cooled with another rate rise as soon as May”.
 
According to the Governor of BoE, Mark Carney the rates “need to rise sooner” and it needs to exceed the central bank’s estimation of last November, as it “raised borrowing costs for the first time in a decade”. In general, economists are of the opinion that the rate hike will take place in the month of May, while the “financial markets” could wait for a further, one percent increase, by “the end of the year”.
 
 
References:
reuters.com







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