Thursday, September 1, 2011
Low growth and low interest rates
This time last year economists were expecting rates would have risen to 1.0 percent by the end of September and rise 25 basis points per quarter to reach 1.75 percent by end-June 2012 but the successive rounds of disappointing growth numbers have pushed back expectations. Rates are not seen rising until the final quarter of 2012, and then to 0.75 percent compared to a rise to 1.0 percent in an August 17 poll. Markets have not priced in any hike until 2013 at the earliest. None of the economists polled said the bank would raise them on September 8 -- or indeed before the end of the year. In a poll taken ahead of August's meeting 14 of 62 saw a rise by year-end and one of them now sees a cut to 0.25 percent next quarter.