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27 Jan 2015
BOE may hike rates in Q3 2015 – Danske
FXStreet (Barcelona) - Mikael Olai Milhøj, Analyst at Danske Bank, expects BOE to hike rates in Q3 2015, expecting continuing UK growth to lead further tightening in the labour market and support this view.
Key Quotes
“We expect that the UK economy will continue to perform well this year as it got tailwinds from several directions. Firstly, British workers are experiencing positive real wage growth for the first time since 2009 due to a combination of low inflation and increasing nominal wage growth, which should support private consumption. Secondly, the lower oil price will boost growth in both the US and Europe, which should increase foreign demand for British goods.”
“The continued progress in the UK will lead to a further tightening in the labour market, which should be reflected in the wage formation. Hence, we expect that Bank of England (BoE) will hike the Bank Rate in Q3 this year.”
“However, the low inflation, mainly due to lower commodity and food prices, is a downside risk to this forecast, as this gives the BoE the opportunity to stay patient.”
Key Quotes
“We expect that the UK economy will continue to perform well this year as it got tailwinds from several directions. Firstly, British workers are experiencing positive real wage growth for the first time since 2009 due to a combination of low inflation and increasing nominal wage growth, which should support private consumption. Secondly, the lower oil price will boost growth in both the US and Europe, which should increase foreign demand for British goods.”
“The continued progress in the UK will lead to a further tightening in the labour market, which should be reflected in the wage formation. Hence, we expect that Bank of England (BoE) will hike the Bank Rate in Q3 this year.”
“However, the low inflation, mainly due to lower commodity and food prices, is a downside risk to this forecast, as this gives the BoE the opportunity to stay patient.”