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Long, hot summer for UK - and BoE

Thursday, July 17, 2014 - 02:23

With Britain sweltering in a summer heatwave, things are warming up in the UK political arena, too, ahead of next year's election. And for the economy, prompting a new round of debate over how the Bank of England should respond. David Pollard reports.

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Heatwave Britain. Hard to believe maybe, but with temperatures nudging 30 degrees celsius, the UK's been hotter than Hawaii. Not only the weather's warming up. The economy too - latest numbers showing employment at a record high. And the jobless rate - a key marker for the Bank of England's rate-setters - falling on the previous month. Inflation surged to a five-month high in June. And London property prices have been rising a record amount. Time then, for the Bank of England to hike rates? Darren Sinden of Titan Investments. (SOUNDBITE) (English) TRADER AT TITAN INVESTMENT, DARREN SINDEN, SAYING: ''We've always thought that rates might have to go up sooner rather than later. I think it was interesting to see Mr. Carney say that the outlook for rates in the medium term hasn't changed. I think most people now are sort of realistically expecting a rate rise either at the end of this year or the very early part of 2015 and I think probably, you know, we would subscribe to that view.'' And indeed, Bank of England Governor Mark Carney was at pains this week to avoid pinpointing a timing of a first hike. His forward guidance policy - carefully charting a course between an improving data outlook and the risks that still remain in the economy - is aimed, he said, at signalling rate changes over the medium term. One potential cloud on the horizon: wages growth. Or lack of it: pay rose at its feeblest rate in five years in May - still a worry for Carney - and potentially complicating his rates outlook. And, no doubt, for Prime Minister David Cameron, who put some heat under the political debate with a government reshuffle this week. Out went Education Secretary Michael Gove - increasingly unpopular with teaching unions - in came a number of Eurosceptics and women to appeal to voters in next May's national election. It may have little effect. (SOUNDBITE) (English) TRADER AT TITAN INVESTMENT, DARREN SINDEN, SAYING: ''The public are not stupid. They will see that probably more as a PR exercise more than anything else. I think policy is really what people want. We have got ten months to go before the election. I doubt the government could achieve very much over that time frame. Perhaps they'll come up with some vote winners for the election manifesto, but I don't them it's enough to guarantee them re-election by any means.'' Finance Minister George Osborne kept his job - that's seen as a vote of confidence in his stewardship of the economy. But the UK has a new foreign minister: Philip Hammond, a prominent Eurosceptic who may attract rather less enthusiasm in Brussels.

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Long, hot summer for UK - and BoE

Thursday, July 17, 2014 - 02:23

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