Old Mutual Global Investors head of UK equities Richard Buxton says he does not expect the Bank of England to hike interest rates before the 2015 general election.
Speaking at The Platforum’s eighth annual conference last week, Buxton said the BoE would not look to raise rates until it saw inflation in wages which would not happen until the middle of next year.
Buxton said: “It is going to be after the next election in May, I think the Government, the Bank of England and the MPC know that while we are deleveraging steadily as a consumer society there is still a lot of debt out there and there’s still a lot of people with very high loan-to-value mortgages.
“Even at today’s level of interest and mortgage rates, making those mortgage payments is still taking up a lot of their disposable income.”
Buxton said after the election the BoE would raise the interest rate by 25 basis points and then monitor the impact, adding that it would be many years before rates reach 3 per cent.
He added: “They will raise it by 25 basis points and watch for several months just to see the impact on bills and consumption rates and on the housing market etc.
“It is going to be an incredibly slow and long journey to rates of 3 per cent and it will be a multi-year journey.”