View more on these topics

Former Bank of England rate setter predicts rise to 3% by early 2020s

Former Monetary Policy Committee member says interests rates could jump as high as 3 per cent

Bank-of-England-BoE-Building-Horse-700x450.jpg

A former Bank of England Monetary Policy Committee member has predicted that interest rates could rise to 2 or 3 per cent by the early 2020s.

Now senior economic adviser at PwC, Andrew Sentance was speaking at the Building Society Association conference in London earlier today, and also estimated that the UK will lose about 3 per cent of GDP by 2020, compared to where the country would have stood without Brexit.

“Inflation has now caught up with wage growth causing a sharp consumer slowdown,” said Sentance.  “The weak pound has also squeezed consumers and the expectation is that households will adjust their spending.”

However, he said that the UK economy would recover following weakness after the Brexit vote, with “reasonably healthy growth for 2017 and 2018, based on current forecasts.”

He added that if EU negotiations do not go well, this could “prolong disappointing growth into the early 2020s.”

Sentance told the conference that he believes inflation will rise “to around 3 per cent or higher later this year” and that interest rates “should follow the US policy of gradual rises” to reach 2 to 3 per cent before 2024.

He also estimated that the world economy in 2022 will be three times the size it was in 2000, heading for $100tn (£77tn), but that the pace of growth will slow.

The Building Society Association conference is a two-day event currently underway at the Building Design Centre in north London.

Recommended

Mark-Carney-with-bank-note-in-background-700.jpg

Carney: Interest rates could go either way

Bank of England governor Mark Carney has suggested an interest rate hike is more likely this year if wage growth outstrips expectations. Rates could go either way though, he says. Speaking to the press after yesterday’s launch of the Bank’s inflation report and monetary policy update, Carney said the Bank has assessed the resilience of the UK […]

2

Bank of England downplays low interest rate savings concerns

Bank of England monetary policy committee member Gertjan Vlieghe has hit back at criticism that low interest rates are hitting savers because most UK wealth is held in property rather than bank deposits. Half of the UK household’s net wealth, which totals £10trn, is in property, Vlieghe said at Sheffield University on Monday evening. Only £1.5trn […]

The Investment Clock: Keep calm and Macron!

Trevor Greetham, Head of Multi Asset In a marked contrast to the surge in risk sentiment that followed President Trump’s election in November, markets greeted Emmanuel Macron’s victory in the French presidential election with satisfaction and relief, rather than euphoria. After rallying strongly on opinion polls that accurately predicted the outcome, the euro held onto […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment