BOE’s ‘Super Thursday’ to offer signal on UK rate future

When the BoE releases its interest rates decision at 12.00 p.m BST (7 a.m. ET), the minutes from its meeting will reveal that at least two of the central bank’s nine rate setters will vote for a hike in rates, according to Reuters.

Carney: Super Thursday will “enhance our transparency and make us more accountable to the British people”.

Any signs that accelerating growth and wages could drive up CPI more quickly than expected will be seen as an indication that interest rates may have to go up sooner.

In the latest example of a change in momentum, the minutes of the July meeting contained this new line: “For a number of members, the balance of risks to medium-term inflation relative to the 2 per cent target was becoming more skewed to the upside at the current level of bank rate”.

Instead, it broadly endorsed market forecasts that a hike would come next spring – the same as had been indicated at the time of the last inflation report three months ago – though the rise in rates after that is seen as being slightly steeper.

There’s also the MPC’s assessment of Greece, which last month was a “very material factor” in the decision.

Publishing all three documents at once is a first for the Bank which usually publishes them on separate days.

Forward contracts based on the sterling overnight index average, or Sonia, show they predict rates will rise in May.

In addition, official data recently showed the first rise in unemployment for more than two years while the strength of the pound has weighed on the price of imported goods. It is therefore likely that I will need to write further open letters to you in coming months.

The minutes of the preceding meeting already suggested that they are increasingly anxious about inflation, as surprisingly strong wage growth triggered concerns that inflationary pressures might be more pronounced than expected so far.

“But the majority of the committee will want to wait for inflation to pick up before considering a rise”.

The rate of interest will affect how much money you pay back overall and each month.

The seven-member committee voted unanimously to maintain the benchmark interest rate at 1.5%, only 25 basis points higher than the record low of 1.25% implemented during the 2009 global financial crisis. “As such, this represents a baby step closer to a rate hike rather than a stride”.

Economists on the street continue to remain positive about the growth in the UK economy and believe that the slightly lower reading would deter the hawks in the Bank of England to hike interest rates any time in the near future.

TUC assistant general secretary Paul Nowak said: “The Bank is right to keep rates on hold and recognise the ongoing risks to our weak economic recovery”.

Some market participants speculate that David Miles might support a rate hike, too.