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Premier Partners Group: suggests anemic growth means UK rates unlikely to increase until 2012.

 “Premier Partners Group” believes that, although the Bank of England's base rate has stood at 0.5% since March 2009, it is unlikely to increase them until 2012 at the earliest.

“An increase in interest rates would help to bring down the consumer prices index (CPI) measure of inflation, which has hit 4.5pc but the MPC (Monetary Policy Committee) cannot afford to squeeze an economy that is still coming to terms with the coalition governments spending cuts and tax hikes,” said a “Premier Partners Group” analyst.

Recent data shows that manufacturing, construction and services suggest the economy grew just 0.3% in the second quarter of 2011 following an already disappointing print of 0.5% in the first.

“Premier Partners Group” now do not anticipate a rise in rates from the current rock-bottom until 2012. Economists have scrambled to push back their rate rise forecasts in recent weeks, taking their cue from money markets which are not fully pricing in a hike until mid-2012.
One of the main worries for the Bank's Monetary Policy Committee is the deterioration in consumer spending, as strapped households delay all but essential purchases because they fear for their jobs amid the faltering economy and Government cut-backs.