According to a forecasting body, The Bank of England should hold off from raising interest rates next month. The Bank Governor, Mark Carney said that rates could go up in the ‘relatively near term’ with analysts expecting an increase next month.The EY Item Club however has said that this move could risk hurting the UK’s already fragile economic outlook.
The group called on The Bank of England’s Monetary Policy Committee (MPC) to wait at least another 12 months before raising the benchmark rate from 0.25% to 0.5%. This news comes after the British Chambers of Commerce and Standard & Poor’s suggested that the economic growth was not strong enough to withstand a rise.EY Item Club also predicted that growth would slow to 1.5% this year and 1.4% in 2018.
Chief economic advisor to the EY Item Club, Howard Archer said “While it is understandable that the MPC will want to gradually normalise interest rates from their current ‘emergency levels’, we believe that it would be better to do so once the economy is on a stronger footing.”