The Bank of England is unlikely to raise interest rates for at least a year, according to a panel of economists.
The experts doubt that the Bank will move to hike rates while the government is embroiled in Brexit talks with the European Union.
Shifting the rate upwards would likely add to economic uncertainty and could drive the country back into recession because of fears of the unknown.
With Brexit talks stalling, Prime Minister Theresa May is working to speed them up to allay concerns of business and investors.
Even though one Bank of England rate setter feels a rise is necessary to control inflation, most economists spoken to in a BBC survey believe he is a lone voice and that wages will rise to curb inflation over the coming months.
Inflation set to fall
Bank governor Mark Carney has played down concerns about a rise by stating ‘now is not the time to lift the rate.
Interest rates have stuck at a record low of 0.25% since August last year, when they slipped down from 0.5%, where they stayed pegged from March 2009.
The experts argue higher wages will encourage more spending that will put a brake on inflation.
“We believe that policymakers will be reluctant to tighten monetary policy until greater clarity emerges around the UK’s post-EU trading framework, and our expectation of declining inflation through 2018 should also reduce the pressure for an interest rate rise,” Stuart Green of Santander Global Corporate Banking told the BBC.
Stress on holiday Pound
He echoed the feelings of many other experts who predict rates will stay at 0.25% until Brexit passes in March 2019 to avoid a shock to the economy.
Although an interest rate rise is considered unlikely, most economists do expect the Pound to weaken against the US dollar and Euro.
US bank Morgan Stanley forecasts the Pound will drop another 10% and is urging holidaymakers to buy their Euros sooner rather than later to get the best deal.
Meanwhile, the pressure is also off the US Federal Reserve to increase the rates Stateside.
Uncertainty about President Donald Trump’s economic policies is keeping a lid on inflation there.
