According to the Monetary Policy Committee, the Bank of England may be ready to increase its borrowing costs by August. Analysts see that this might be due to the improving economy and the consumer spending caused by PPI refunds.
Martin Wheale, an MPC member, believed that rising wages, improved PPI refund systems and low unemployment points to a progressive UK economy. While low oil prices is keeping inflation down, the Bank of England has held long enough before increasing the benchmark interest rate rises.
However, analysts see that consumer spending and confidence has not yet improved. Following the recent meeting of the British Bankers Association there is more is to be done if the UK banking industry intends to improve its relationships with consumers after the damages mis sold PPI has caused.
The tightening labour market with inflation close to zero is a sign that interest rates need to increase else value will continue to lower. Higher wages, regardless of consumer trust in banks, will play a higher role for PPI mis selling.
Meanwhile, PPI may or may not continue further from 2016 as banks pause and re-assess their refund allocation for PPI mis selling.