Pressure eases on Bank to cut interest rates as UK economy improves
The British economy performed more strongly than expected in January, according to figures released on Friday, raising the likelihood that the Bank of England will hold interest rates next week.
The latest PMI data – a monthly snapshot of the UK economy – came in at 52.4, with any score above 50 representing growth. Last month’s figures came in below the benchmark.
The Bank of England’s rate-setting monetary policy committee (MPC), which has been increasingly divided on the issue of raising rates from their current level of 0.75%, announces its latest decision on Thursday.
The outgoing Bank of England governor, Mark Carney, said this month that evidence of further deterioration in the economy could persuade the MPC to vote for a rate cut. At the last MPC meeting, members voted 7-2 to hold rates but since then three MPC voters – including Carney – have indicated that a cut is likely if the economy continues to underperform.
However, official employment data this week showed that Britain’s jobs market staged a stronger than expected recovery in the three months to November, which eased pressure on the MPC to cut borrowing costs.
