Booming economy a rates poser for Carney
Record survey readings from all three main sectors of the UK economy in August will make it harder for the Bank of England's Governor, Mark Carney, to fulfil his pledge to keep rates on hold until 2016, City economists predicted yesterday.
"We expect the Bank to be forced into tightening monetary policy well before the date that they are currently suggesting," James Knightley of ING said.
The Markit/Cips composite purchasing managers' index, which covers services, manufacturing and construction, surged to its highest-ever level last month. The index rose to 60.7, up from 59.9 in July, with any reading above 50 signalling expansion. The services index hit 60.5, the highest since 2006. The Bank's Monetary Policy Committee will announce its decision today on whether to restart quantitative easing. Last week Mr Carney, in his first speech as Governor, said that if UK financial conditions continued to tighten, jeopardising growth, the Bank would consider more stimulus, but most analysts are expecting no further easing today.
The pound rose against the US dollar in response to the recent flow of strong economic data, rising yesterday to $1.56.