Buxton: MPC will hold rates this year despite 5% inflation

Schroders' Richard Buxton believes the Bank of England will hold off on raising interest rates this year despite his forecast inflation could reach 5%.

Last week the Monetary Policy Committee (MPC) voted to keep rates at 0.5%, but many analysts predict it will begin to increase by the autumn, while others say it will be as early as the end of Q2. The head of UK equities at Schroders said inflation, which has been above its 2% target since December 2009, will go up to between 4% and 5% over the year, as this is not due to factors inside the UK economy, interest rates will remain static, he believes. “Mervyn King is very concerned about the impact of fiscal tightening and I think he will manage to persuade his colleagues not to raise r...