BoE: Rate rise likely in May 2016 – Rabobank

By FXStreet FXStreet (Delhi) – Jane Foley, Senior Currency Strategist at Rabobank expects that the first rise in BoE rates is likely to be May 2016. However, headwinds stemming from weaker growth in emerging markets suggest there is risk that the date for lift off could be pushed back.

Key Quotes

“When BoE hawk McCafferty warned in late July that the Bank of England must be careful not to leave it too late to hike interest rates he was predominantly guided by domestic fundamentals. Specifically, he referred to private sector wage growth as offering a good guide to future inflation pressures.”

“The minutes of the August MPC clarify that some members of the MPC saw upside risks to the inflation forecasts, reflecting the likelihood of stronger demand growth, buoyed by improved credit conditions and consumer confidence.”

“The UK, however, will face headwinds blown in from slow growth elsewhere. Given that China’s slowdown coincides with recessions in Brazil and Russia and weakness in various other EM nations, the severity of this diagnosis could be scaled up.”

“In all likelihood the MPC will be viewing the risks facing the domestic economy this month in a tangibly less positive light …read more

Source:: FX Street