The Monetary Policy Committee (MPC) should keep interest rates at 0.5% until November, as any rise will cause "disastrous consequences" for the UK economy, a group of influential economists has warned.
The Ernst & Young ITEM Club says the MPC should avoid raising interest rates ahead of reliable evidence the corporate recovery was fully under way, despite high inflation. Inflation fell by 0.4% to 4% in March as the cost of food and drink lowered, but it is still double the Bank of England's target. It was the first fall in the consumer price index (CPI) for eight months and marked a drop from the 28-month high of 4.4% in February. The ITEM Club expects inflation to ease naturally next year, once the VAT increase and other temporary factors passed out of the index. It also says...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes