Rate hikes dent job confidence


Rate hikes dent job confidence
Consumers are becoming increasingly concerned about their job security following the recent raises in interest rates, according to Lloyds TSB.

The Bank of England's monetary policy committee (MPC) has increased rates five times in the last 12 months in an effort to combat strong upward inflationary pressures.

In the wake of last month's widely-expected quarter-point hike, the Lloyds TSB consumer barometer for July shows expectations for a further rate hike remain high. Seventy-nine per cent expect another rise in the next 12 months, down just one per cent on last month.

This has impacted on job security, with the balance of those reporting worse employment prospects increasing compared to 12 months ago. Attitudes towards inflation are also in decline, despite consumer price index inflation falling to 2.4 per cent in June.

Lloyds TSB Corporate Markets chief economist Trevor Williams suggested this data might help persuade MPC members against a further rate hike before the end of the year, as consumer pessimism could convince them their previous hikes are working.

"The growing uncertainty consumers feel about the labour market should appear in weaker confidence indices and a slowdown in spending in the coming months," he said.

"The Bank of England will be watching this data particularly closely as it could determine whether they will need to raise interest rates again this year."

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