The Monetary Policy Committee (MPC) may start raising interest rates as early as March this year, according to Simon Ward, the chief economist at Henderson Global Investors.
The minutes of January’s MPC meeting, which kept rates on hold again at 0.5%, are released on Wednesday. Ward says if these show that Andrew Sentance received more support among fellow MPC members for a rate rise, then the first hike could happen as soon as March.
“Either rates will rise soon or they won’t at all,” says Ward. “If they are going to do it, why wait? If, however, the minutes don’t show added support for Sentence, I will change my view on a March rate rise.” (article continues below)
Last week’s announcement that inflation jumped to 3.7% in December is expected to lead to more support for a rate rise.
Bond markets are now pricing in a 0.25 percentage point hike in for June and two other quarter point rate hikes later in the year, according to M&G.