The Bank of England shouldn’t rush to raise its benchmark interest rate from a record low as the U.K. contends with an inflation rate that’s dropped to zero, the International Monetary Fund said.
In its World Economic Outlook published on Tuesday, the fund said it expects “continued steady growth” in the U.K. It forecast expansion of 2.7 percent this year and 2.3 percent in 2016, little changed from its projections in January.
The report comes as Britain’s political parties unveil their manifestos in the buildup to the general election in less than a month. In its analysis, the IMF said measures to increase housing supply should be a “priority.” Polls show there is little to separate the ruling Conservative and the opposition Labour Party before the May 7 ballot.
Data today showed the U.K. inflation rate remained at zero in March, which compares with the BOE’s 2 percent target. The IMF said that monetary policy “should stay accommodative for now, given currently weak inflation pressures.”