Following the decision to keep interest rates on hold in June, Andrew Smith, chief economist at KPMG in the UK commented:
“The MPC hawks may now have missed the boat as far as an interest rate rise this year is concerned.
“The growth/inflation trade-off is becoming ever more acute as inflation continues to rise but signs of weak growth accumulate, but for the moment, this is entrenching the hawks and doves on the Committee in their respective positions.
“This stalemate between those more worried about inflation, who want to tighten policy, and those more worried about growth, who want to keep rates on hold, could continue for an extended period. With the fiscal squeeze now starting to bite and the Chancellor emphatically ruling out a U-turn the prospects for the recovery will remain under a cloud, while on the Committee’s own forecasts inflation is yet to peak. It may well be 2012 before the stand-off is resolved.”
-Ends-
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk
KPMG Press Office: 0207 694 8773
Notes to editors.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
