# Divided Bank of England edging closer to raising interest rates, but unlikely to move in August Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-08-01 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Bank of England Monetary Policy Division: Prepare for Higher Meta Description: Discover the internal divisions at Bank of England over interest rates. Analysts at odds as households told to brace for higher rates amidst Brexit process and URL: https://financedigest.com/divided-bank-of-england-edging-closer-to-raising-interest-rates-but-unlikely-to-move-in-augusthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/1-1-1736843634657-compressed.jpg) - **Internal divisions over monetary policy at Bank of England** - **UK households should “prepare for interest rates to go higher”** - **Snap election and Brexit process likely to mean rates held rates in August** The Bank of England (BOE) appears to be at odds over how to proceed with [monetary policy](https://www.financedigest.com/uks-ftse-100-dips-on-scope-of-tighter-monetary-policy-informa-jumps.html "UK’s FTSE 100 dips on scope of tighter monetary policy; Informa jumps"). This internal division was on display at the June Monetary Policy Committee (MPC) meeting when three policymakers dissented the [central bank’s decision to keep interest rates](https://www.financedigest.com/czech-central-bank-vice-gov-unlikely-to-vote-for-rate-cut-newspaper.html "Czech central bank vice-gov unlikely to vote for rate cut -newspaper") at record lows. Committee member Michael Saunders, who voted to tighten monetary policy, recently told UK households to prepare for [higher interest rates](https://www.financedigest.com/uk-house-prices-fall-by-most-since-2009-higher-rates-to-bite-nationwide.html "UK house prices fall by most since 2009, higher rates to bite-Nationwide"). **“I think households should prepare for interest [rates to go higher at some point](https://www.financedigest.com/ecb-goes-big-with-50-basis-point-hike-ending-negative-rates-era.html "ECB goes big with 50 basis-point hike, ending negative rates era"). But if rates do go up, it will be in the context of the economy doing OK and unemployment being [low and probably falling](https://www.financedigest.com/german-real-yields-fall-to-new-record-lows-on-stagflation-fears.html "German real yields fall to new record lows on stagflation fears").** **“** **Michael Saunders,** [Bank of England](https://www.financedigest.com/markets-could-face-sharp-correction-bank-of-england-warns.html "Markets could face ‘sharp correction’, Bank of England warns") Monetary Policy Committee Saunders isn’t the only one talking up an interest rate increase. Andy Haldane – another voting member of the MPC – clashed with BOE Governor Mark Carney last month by stating he was seriously considering voting for a [rate hike](https://www.financedigest.com/world-bank-cuts-2024-global-growth-forecast-as-rate-hikes-bite-but-lifts-2023-outlook.html "World Bank cuts 2024 global growth forecast as rate hikes bite but lifts 2023 outlook"). Against this backdrop, traders are wondering whether the MPC will pull the trigger on a [rate hike](https://www.financedigest.com/uk-inflation-hits-9-4-bolstering-bets-on-big-boe-rate-hike.html "UK inflation hits 9.4%, bolstering bets on big BoE rate hike") at its forthcoming meeting on 3 August. Given the 5-3 split in the June decision, it appears unlikely that the hawks will get the two swing votes they need to make it happen – at least, not yet. ![Divided Bank of England edging closer to raising interest rates, but unlikely to move in August2](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2-1736843634583-compressed.jpg) At the same time, Brexit uncertainty will likely [pour cold water](https://www.financedigest.com/london-stock-exchange-pours-cold-water-on-merging-listing-segments.html "London Stock Exchange pours cold water on merging listing segments") on any attempt to tighten policy less than two months after the snap election. **“The consensus appears to share this view, with only two of 80 economists [polled by Reuters saying they expect a rate hike](https://www.financedigest.com/ecb-to-go-big-again-on-oct-27-with-75-bps-rate-hike-reuters-poll.html "ECB to go big again on Oct. 27 with 75 bps rate hike: Reuters poll") next week. In fact, these economists don’t expect the BOE to act anytime soon, as policymakers wait for [wage growth](https://www.financedigest.com/dollar-jumps-as-u-s-job-gains-wage-growth-beat-expectations.html "Dollar jumps as U.S. job gains, wage growth beat expectations") to catch up with inflation. This means traders should expect the official Bank [Rate to remain at its record low](https://www.financedigest.com/russia-jobless-rate-stays-at-record-low-of-3-9-in-july.html "Russia jobless rate stays at record low of 3.9% in July") of 0.25% – perhaps until 2019. Based on the way they began, Brexit negotiations are expected to be a long and [bumpy ride](https://www.financedigest.com/autonation-gets-a-bumpy-ride-as-investors-worry-about-u-s-consumers.html "AutoNation gets a bumpy ride as investors worry about U.S. consumers"), giving policy doves all the justification they need to keep rates low.** **“** **James Trescothick,** Senior Global Strategist, [easyMarkets](http://r20.rs6.net/tn.jsp?f=001aFmbgbQ8Y5iX-famgUaogXdtk_qTgZG8lB_2w-jhjodB5rBrQ7w-EHPNAKuUcGFOKlaFGmU9Wiu_VG6alpYZHZEkarE1mwyrcg9AcyJZK_sokGBywMtyH_M1mSh9KuG5gXp_rhzyhKAQV4-ZV_Hj-n32VcOTaXhFNy8f0ZYGR7rXd2g4Ur-y7w==&c=bqtOKVIkTMLylUhP_kmUJVQAro90NHB4CuEmdu4HEWz2z3_PsvQv7g==&ch=3BlvG_HfcojsXfaGJU4UE9ZBUPrZE2eexy6B4prIg08_dnycyIPCuQ==) The BOE eased monetary policy last August for the first [time since](https://www.financedigest.com/sterling-slides-below-1-15-for-first-time-since-2020.html "Sterling slides below .15 for first time since 2020") the recession in response to the Brexit referendum. Although the British [economy has had a resilient](https://www.financedigest.com/stocks-dollar-gain-on-resilient-u-s-economy.html "Stocks, dollar gain on resilient U.S. economy") year, its outlook continues to be plagued by uncertainty. Official Brexit negotiations began last month. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---