No rate hike until Autumn 2015, predicts E&Y

The Bank of England's Monetary Policy Committee (MPC) should hold off on raising interest rates even though its stated threshold for doing so - a fall in the unemployment rate to 7% - is in sight, according to a report.

As well as unemployment, the Committee should add a requirement for real wages to be rising before it increases rates, according to the latest Ernst & Young (E&Y) ITEM Club report. The report highlights that, as the annual rate of inflation has steadily fallen in the last two years, this has not been accompanied by a rise in earnings. Over the same period that saw CPI inflation fall from 4.7% to 2.1%, earnings inflation has also fallen, from 3.2% to 1%. The E&Y report therefore concludes the MPC should hold off increasing interest rates until business investment and exports have also ...