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4 May 2016
BoE could hike later than expected – Rabobank
In view of Strategist Carlijn Prins at Rabobank, the BoE could push further back its first rate hike.
Key Quotes
“Sterling was hit heavily in the first quarter of the year on the back of political uncertainty. April has brought a better tone”.
“This likely reflects the generally better position of the ‘Remain’ camp in the EU membership opinion polls although it is possible the reassurances of some leading ‘Leave’ campaigners about the UK economy in the event of a Brexit may also have had some impact on diminishing perceived political risk”.
“That said, Governor Carney has repeated that a Brexit would be the biggest domestic risk for the UK economy and we would expect the Bank to maintain a very cautious policy outlook on such an event”.
“Even after a ‘Remain’ vote, the risk that the slower pace of UK growth recorded in Q1 could extend into Q2 suggests that the first BoE rate hike could be delayed further into 2017”.
Key Quotes
“Sterling was hit heavily in the first quarter of the year on the back of political uncertainty. April has brought a better tone”.
“This likely reflects the generally better position of the ‘Remain’ camp in the EU membership opinion polls although it is possible the reassurances of some leading ‘Leave’ campaigners about the UK economy in the event of a Brexit may also have had some impact on diminishing perceived political risk”.
“That said, Governor Carney has repeated that a Brexit would be the biggest domestic risk for the UK economy and we would expect the Bank to maintain a very cautious policy outlook on such an event”.
“Even after a ‘Remain’ vote, the risk that the slower pace of UK growth recorded in Q1 could extend into Q2 suggests that the first BoE rate hike could be delayed further into 2017”.