Aside from revising growth lower and putting an end to sterling’s election-led rally, The Bank of England’s May inflation report once more placed the spotlight firmly on productivity growth as the possible bad apple that could upset the whole cart.
Inflation should return to its 2% target within the next two years, the Bank of England said on Wednesday, but labour productivity remains the key uncertainty, as it downgraded its forecast for UK GDP growth from 2.9% for 2015, to 2.5%.
News that the Bank of England’s monetary policy committee was split seven to two on whether or not to raise interest rates at its latest meeting is unsurprising, but how much should be read into it?
The Bank of England’s deputy governor, Paul Tucker, has tabled the use of negative interest rates as a potential monetary policy, prompting the Treasury Select Committee to ask for a further explanation.
Minutes from the latest MPC meeting show banks could further restrict lending to businesses and households.
