Interest Rate Hike Possibility Falls with Recent Economic Data
After months of talk of a possible interest rate hike taking place this month, it appears unlikely after recent published data paints a picture of an economy not ready for the move. Data from the service sector during the month of April along with other data speaks to the possibility of an interest rate hike being placed on the backburner for now. Overall, the economy grew at a rate of 0.1% in the first quarter which is the slowest since 2012.
Indications point to an interest rate hike being pushed back at least for now, according to some economists.
Chris Williamson of IHS Markit commented on the latest data supporting a possible interest rate hike, saying: "The disappointing services data will add to expectations that the MPC (Monetary Policy Committee) will take its finger firmly off the rate hike trigger.”
Williamson added: "Any further slowing will also raise questions as to whether the November rate hike may have been ill-timed."
Talk of interest rates and rate hikes will become clearer as the Monetary Policy Committee meets next week for the monthly meeting within the Bank of England.
Along with growth, inflation remains at a modest level in comparison to fourth quarter 2017 levels. This further clouds the picture of the necessity of an interest rate hike at this time.
House owners continue to see two year mortgage packages mature and remain keen on seeking remortgage. Demand for the lending tool remains high and is expected to stay at this level for several months.