Topic updates
Normalising interest rates

30th October 2017
This autumn, the Bank of England is expected to start raising policy interest rates from an ultra-low level of 0.25%.
The looming interest rate rise: how it will affect you https://t.co/pqj1HLK7om pic.twitter.com/1USQLEG703
— Guardian Visuals (@GuardianVisuals) October 30, 2017
As we approach the tenth anniversary of the UK economy last falling into recession (the second quarter of 2008), it remains a remarkable fact that policy interest rates in the UK and many other developed countries have historic lows at close to or below 0%.
The Bank of England’s Monetary Policy Committee (MPC) lowered the base rate from 0.5% to 0.25% on 4 August 2016, the first change since March 2009, and the lowest since the Bank was founded in 1694.
Slowly and in small steps, we are likely to see the main monetary policy interest rate to edge higher as the process of normalisation starts.
There is much uncertainty about the timing and scale of interest rate rises, not least with Brexit uncertainty a key feature going forward.
Here are some links to the lively debate among academic economists over whether now is the right time for the Bank of England to raise interest rates.
Your starting point could well be this article from BBC news - Is now the time to raise interest rates?
This Guardian article is also excellent from an evaluation perspective - Twist or stick: two sides of the vital interest rate decision facing UK
Normalising interest rates in baby steps - @NIESRorg director #JagjitChadha on monetary policy https://t.co/CEvVwBaypb
— Romesh Vaitilingam (@econromesh) October 30, 2017
Oxford economist Simon Wren-Lewis makes the case for keeping interest rates at their current low
New post: A short guide to why we should not raise UK interest rates https://t.co/Ms1szIL7XI
— simon wren-lewis (@sjwrenlewis) October 30, 2017
Andrew Sentance argues that rates should be rising now
Why the #MPC should raise interest rates in November - a brief summary of the key arguments. RT if you agree! pic.twitter.com/KIzTZVi2Y8
— Andrew Sentance (@asentance) October 30, 2017
The Economist believes the next rate rise should be delayed
The Brexit threat is not yet over, and Britain's economy is not overheating. Interest rates should remain low https://t.co/I5UhwotRdE pic.twitter.com/4xVbbeBlyV
— The Economist (@TheEconomist) October 26, 2017
A boost to savings from higher interest rates is unlikely to translate into much extra spending https://t.co/9uHb6xhmRe
— The Economist (@TheEconomist) October 30, 2017
Bank of England may raise interest rates next week - but a premature hike can be dangerous https://t.co/kNg2GJPY7X pic.twitter.com/dMKSlGWu1q
— Bloomberg UK (@BloombergUK) October 29, 2017
Former BBC Newnight economist Duncan Weldon fears weakening economic activity and confidence means that this is not the moment to raise interest rates.
I used to think the BOE raising rates would be a good thing - a sign of confidence. I was wrong. https://t.co/jkbCfRqy42
— Duncan Weldon (@DuncanWeldon) October 26, 2017
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