Britain’s Economy Slightly Grew, Increase Stakes for a Rate Hike

The British economy has gained track in May after its slowdown in early 2018, based on the official report from the Bank of England that brings more confidence in raising interest rates the next month.

This month, the new reading of gross domestic product rose by 0.3 percent in May compared last month growth of 0.2 percent, which is still in line with the forecast from Reuters poll of economists. This was the steadfast progress since November according to the Office for National Statistics on Tuesday.

The British pound drop against the dollar after the release of data which indicates a mixed outcome. It was mainly driven by the services sector, which is in opposition to the factory output that went down.

An economist from RBC Capital Markets, Cathal Kennedy, said that there is a high chance for the central bank to raise their rates in August.

Most of the top officials, as well as the BoE Governor Mark Carney, chose to increase their rates in may due to the economic slowdown in 2018.

They considered the recent event to be fleeting because of cold winter instead of a bigger problem ahead of the Brexit in 2019.

Although, the recent turmoil in the government of Prime Minister Theresa May with split interest over Brexit with the ruling Conservative party. This could have an impact on employers, affecting their confidence that could be another obstacle to be faced by the central bank.

The British economy rose by 0.2 percent in the three months to May as expected after its static growth between the period of February and April.

According to the ONS, the economy was 1.5 percent bigger than in May 2018.

The Monetary Policy committee is anticipated to raise their rates to 0.75 percent by 25 basis points. This was the second rate hike over 10 years in August as shown in the Reuters poll of economists.