Financial markets have revised expectations for an interest rate increase by the U.K. central bank sharply for a later policy change as concern over the health of the economic recovery mount, according to Financial Times. The Bank of England’s first interest rate increase is now expected to come in November, rather than September as was expected last week and far later than the May increase forecast in February. HSBC has even forecast for a delay in fiscal tightening until the first quarter of 2012 on weak domestic growth and the instability in the Middle East.
Meanwhile, some economists are growing increasingly frustrated over the BOE’s stance on inflation, accusing the central bank of misleading markets with its targets and forecasts for price growth, according to The Daily Telegraph. Simon Ward of Henderson said with the rate of price growth continuing to remain at a level double the bank’s target of 2%, “Inflation-targeting has become meaningless.” Ward accused the central bank of “presentational manipulation” and said, “There is no effective constraint on the Monetary Policy Committee’s ‘discretion’.”
Click here to read the story on BOE policy expectations from Financial Times.
Click here for coverage of economists’ reactions from The Daily Telegraph.