Interest rate rise on hold as service industries falter
Purchasing managers’ index rises by less than anticipated
The Bank of England is almost guaranteed to leave interest rates unchanged at 0.5%, analysts say, after news of poor service sector activity in April ended any remaining justification for a rise.
The IHS Markit/CIPS services purchasing managers’ index rose to 52.8 in April, an increase on 51.7 in March, but not as strong as hoped. Economists had expected a rebound in April after activity was curbed by March’s bad weather.
“The disappointing services data will add to expectations that the MPC [Monetary Policy Committee] will take its finger firmly off the rate hike trigger,” said Chris Williamson of IHS Markit. “Any further slowing will also raise questions as to whether the November rate hike may have been ill-timed.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Analysts and investors had been very confident the Bank would raise the rate to 0.75% on 10 May – The Times says the markets put the chance at 90%, but that has now diminished to just 10%.
The poor performance of service industry is just the latest blow, after last month’s weak growth and inflation figures, which had already made a rate rise seem unlikely.
The pound, which had been rising on expectations of a rate rise, has fallen back in recent days.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
'Voters know Biden and Trump all too well'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Is the Gaza war tearing US university campuses apart?
Today's Big Question Protests at Columbia University, other institutions, pit free speech against student safety
By Joel Mathis, The Week US Published
-
DOJ settles with Nassar victims for $138M
Speed Read The settlement includes 139 sexual abuse victims of the former USA Gymnastics doctor
By Justin Klawans, The Week US Published
-
How did America avoid a recession in 2023?
Today's Big Question A downturn was inevitable. Until it wasn't.
By Joel Mathis, The Week US Published
-
Will the UK economy bounce back in 2024?
Today's Big Question Fears of recession follow warning that the West is 'sleepwalking into economic catastrophe'
By Chas Newkey-Burden, The Week UK Published
-
What rising gold prices can tell us about the economy in 2024
The Explainer Market hits all-time high, boosted by a weakening US dollar and rising global tensions
By Flora Neville, The Week UK Published
-
Would tax cuts benefit the UK economy?
Today's Big Question More money in people's pockets may help the Tories politically, but could harm efforts to keep inflation falling
By The Week UK Published
-
Interest rates: more ‘trauma’ for households
Talking Point Latest hike will cause ‘plenty of pain for borrowers’
By The Week Staff Published
-
Interest rates rise to 5.25% for first time in 15 years
Speed Read Inflation is slowing but at 7.9% it remains well above the Bank of England’s 2% target
By Julia O'Driscoll Published
-
Five options to get the UK back to 2% inflation
feature Some economists believe alternatives to raising interest rates are in the country’s best interests
By Sorcha Bradley Published
-
Why aren’t soaring interest rates bringing down inflation?
Today's Big Question PM pins blame for stubborn inflation on fixed-rate mortgages, but economists say the picture is more nuanced
By Arion McNicoll Published