Bank chief economist surprises with interest-rate vote

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Bank of England moves closer to August interest rate rise

The Bank of England has held interest rates at 0.5%, but edged closer to a hike after its chief economist joined two fellow policymakers in calling for a rise.

'Sterling jumped on the news, gaining nearly a cent against the dollar as traders factored in a bigger chance of a move in August.

Savers will be cheered by the hope of rates rising, however, nearly a decade after base rate was cut to 0.5 per cent, as an emergency measure during the financial crisis.

Just yesterday, the markets were pricing in a 3% chance of a rate rise.

As economic momentum improves, fears over rising inflation grow and pressure increases for interest rates to rise.

The interest rate decision comes before Carney gives his penultimate Mansion House speech in the City of London on Thursday night, alongside the chancellor, Philip Hammond, which will be watched closely for clues over the Bank's future policy decisions. ECONOMY "ON TRACK" On Thursday, the MPC said their judgment that economic weakness would prove temporary appeared "broadly on track", and BoE staff confirmed a forecast that growth would resume what it sees as a sustainable rate of 0.4 percent in the second quarter.

The bad news is growth in the first three months of the year was the slowest since 2012, intense winter weather is blamed for the slowdown.

Mr Archer said there was "likely to be only one interest-rate hike in 2018, be it in August or November". While uncertainty remains around timescales, brokers need to start seeing this as an opportunity to re-engage with their back-books."Demand for remortgages is already strong - as the latest UK Finance figures showed - and now is the prime time for brokers to further drive these conversations with the numerous borrowers who are approaching the end of their fixed rate, or who have already reverted to their lender's SVR". At the end of past year Britain's was the slowest-growing economy among the G7 group of rich nations, as businesses held back from investing ahead of Brexit and high inflation triggered by the 2016 referendum eroded households' disposable incomes.

The Consumer Price Index in April and May stayed the same at 2.4% but was expected to increase slightly more than projected in May, reflecting higher dollar oil prices and a weaker sterling exchange rate.

As widely anticipated, the Bank of England kept its monetary policy on hold today.

Online mortgage broker Trussle chief executive Ishaan Malhi says: "The Bank of England has chosen to sit tight today but another rate rise is looking imminent and will likely affect mortgage rates". But he did endorse the MPC's new guidance on how long it will wait before reversing past asset purchases.

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