Consensus expectations on a first rise since the crisis are for it to be a mid or late 2016 event, however Bell thinks there is a possibility a move will be made much sooner.
“We think the pressures for a rate rise will become intense before the end of this year,” Bell said. “At least two members of the committee are likely to vote for a rise at one of the next two meetings. They could form the majority before the end of the year.”
Bell points to rising inflation pressure and strong retail spending as key reasons behind his view. “Retail spending was broadly flat between 2009 and 2012, since then the trend has picked up to a buoyant 4.6% a year,” he said. “With this trend now in its third year, we can reasonably talk of a UK spending boom.”
Wages are also on the up Bell notes. “From 2011 until the middle of last year, wage growth averaged a very modest 1.3% a year. Since then it has picked up to 3.5% a year,” he said.
He added that in his view the MPC is likely to grow ‘increasingly nervous’ as the autumn approaches, given its principle responsibility is controlling inflation.
