Financial News

  • 7 August 2014, 12:20

Interest Rates: Watching For Signals On Rise

The Bank of England (BoE) is set to make a decision on interest rates amid speculation that a rise could be imminent.

With strong economic growth many economists have predicted a rate increase will come sooner than originally expected.

The interest rate has remained at a record low of 0.5% since 2009.

Britain's economy is set to grow by more than 3% this year, which has fuelled expectations that the BoE will be the first central bank in a major developed economy to raise rates.

Some have forecast the hike could come as early as the autumn, while it is widely anticipated to happen in the first part of 2015.

Some members of the Monetary Policy Committee have said the time is coming to ease off on stimulus after unemployment tumbled to 6.5% in the three months to May from 7.8% a year earlier.

Meanwhile, the European Central Bank (ECB) will also make a decision on rates today.

It is widely expected to keep its interest rate at 0.15% after cutting it to the record low in June.

It comes after shock news that Italy slipped back into recession in the second quarter, leading to calls for EU budget reforms.

Germany also experienced a setback as factory orders fell for the second consecutive month in June, dropping by 3.2% compared with May.

It is further evidence that the eurozone crisis rumbles on, as political tensions in Ukraine and Russia also threaten the area's economic outlook.

Advertisement