Investment Clock insights

Bank stays pat after weaker data

Ian Kernohan

11 May 2017

Since the last Inflation Report, GDP data has been softer than the Monetary Policy Committee (MPC) expected, while the recent recovery in sterling has helped to limit upside inflation risk.  In their latest report, the MPC have not altered their signal that policy can respond in either direction as changes to the economic outlook unfold. However, over the medium term, they note that monetary policy could need to be tightened by more than implied by markets.  Wage growth, a key indicator of inflation risk, has been notably weaker than they expected, and with mixed economic data and lack of visibility on any Brexit trade deal, we expect the MPC to keep interest rates on hold for an extended period. 

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.