“On balance, holding rates a wise move for the UK economy” says Yael Selfin, Chief Economist at KPMG UK.
“With recent months characterised with unusual volatility, it is hard to read the full strength of the economy, and wise for the Bank of England to hold before making a change in rates. Moreover, the continued uncertainty until a trade agreement with the EU is agreed means businesses are likely to remain reluctant to invest. A cut in rates now may therefore not stimulate the economy much, while leave the MPC with even less fire power for later when it could be more effective.
“While inflation is currently well below target, at 1.3% in December, this is due to temporary factors and does not reflect the extent of price pressures in the UK. Spare capacity according to the Bank’s own assessment remains relatively low, with the weak investment climate and Brexit distractions taking their toll on productivity.
“As we enter a new era of fiscal largesse, with significant public spending increases expected to be announced in the March Budget and later on this year, the MPC will be right to worry about rising inflationary pressures to come. But savers will need to wait for a long time before the committee considers rate rises again.”
For media enquiries, please contact:
Gill Carson, Corporate Communications
Tel: +44 (0) 20 3078 4189
KPMG Press Office
Tel: +44 (0) 207 694 8773
Follow us on twitter: @kpmguk
Notes to Editors:
About KPMG in the UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 17,600 partners and staff. The UK firm recorded a revenue of £2.40 billion in the year ended 30 September 2019. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.