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28 Dec 2015
UK to witness 2016 bank rate rise - RBS
FXStreet (Delhi) – Ross Walker, Senior UK Economist at RBS, suggests that the first BoE Bank Rate hike for almost a decade (since +25bp to 5.75% in July 2007) will finally materialise – probably.
Key Quotes
“The RBS forecast remains for the first hike to come in August 2016 (this forecast was put in place on 22 September 2015; previously we expected the first hike to come in February 2016). We continue to judge the risks as tilted towards a later move, though a US Fed Funds rate rise in December 2015 prompt sterling markets to raise their implied probabilities of an earlier UK hike (we suspect May 2016 would be favoured over February 2016 by futures markets).”
Key Quotes
“The RBS forecast remains for the first hike to come in August 2016 (this forecast was put in place on 22 September 2015; previously we expected the first hike to come in February 2016). We continue to judge the risks as tilted towards a later move, though a US Fed Funds rate rise in December 2015 prompt sterling markets to raise their implied probabilities of an earlier UK hike (we suspect May 2016 would be favoured over February 2016 by futures markets).”