Bank of England to raise rates mid-2016, CEBR estimates

The Bank of England will hold back on raising interest rates until mid-2016, according to new forecasts from the Centre for Economics and Business Research (CEBR) on Monday.

CEBR had previously expected the BoE to raise rates in February but the risk of weakness in emerging economies - most notably China - on the rest of the globe prompted the think tank to push back estimates.

The UK economy is estimated to slow to 2% in 2016 from an expected 2.5% this year before easing further to 1.7% from 2017 to 2020, the report added. The Office for Budget Responsibility predicted growth would remain above 2% during the period.

Scott Corfe, Head of Macroeconomics at CEBR, said “it’s clear that the global economy has deteriorated significantly over the past few months and there are significant downside risks to the UK’s own prospects”.

“With inflation expected to remain below the Bank of England’s central target of 2% until 2017, we think the Bank Rate will remain on hold until the middle of next year,” he added.