This is the week that the Bank of England and European Central bank will have their say.
Another month has been and gone, and on Thursday we will learn what the interest rate wil be over the next month.
Pity the poor older members of the ECB. They normally get August off, but this time around they will be deliberating and discussing. Last month, when the bank chose to keep rates on hold, it said that will be meeting up again in August – unlike, in previous years, and markets took this as a sign that a rate rise was sure to be announced. Most pundits expect rates to rise to 3 percent.
Meanwhile, most expect the bank of England to keep rates on hold, again – the last time UK rates were changed was in July last year
But while the majority expect rates to stay on hold, some economists expect a rise
With inflation picking up and with signs of a High Street recovery, many fear rates rises are inevitable, and that if August sees no change, then it is just a matter of time before they do go up.
Conversely, others argue that the higher inflation we are seeing at the moment was predicted by the Bank of England, and that core prices, that’s with food and energy taken out, are still modest.
The general feeling is that the UK economy is set to slow down in the second half of this year. But will inflation ease with this slowdown. If it doesnâ€™t, and the bank is forced to raise rates when the economy is slowing – then the economy will suffer a nasty shock.
Watch this space
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