Sluggish UK data lowers chances of rate rise

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“Disappointing” data on the UK service sector has lowered the chances of an interest rate increase next week.

The IHS Markit services purchasing managers’ index rose to 52.8 in April, but was not as strong as expected.

Last month, official figures showed the UK economy grew 0.1% in the first quarter – the slowest rate since 2012.

Given recent weak economic data, analysts say it is unlikely the Bank of England will raise interest rates at its policy meeting next week.

“The disappointing services data will add to expectations that the MPC (Monetary Policy Committee) will take its finger firmly off the rate hike trigger,” said Chris Williamson, chief business economist at IHS Markit.

“Any further slowing will also raise questions as to whether the November rate hike may have been ill-timed.”