Analysts at Wells Fargo had expected the Bank of England (BoE) to hike rates next year, however, given increased uncertainty over the Brexit process, and given heightened risks for a no-deal exit, they are removing those rate hikes from their forecast, and instead see the central bank on hold through end-2020.
Key Quotes:
“The BoE has been hesitant to commit to a contingency plan for policy in the event of a no-deal Brexit, but we think the most likely response would be to cut interest rates in that scenario.”
“With concerns over no-deal Brexit mounting and an ever-higher degree of uncertainty over the next steps for the Brexit process, we are removing BoE rate hikes from our forecast. Instead, we now expect the BoE to keep its Bank Rate steady at 0.75% over our forecast horizon (through Q4-2020).”
“We still think the BoE could hike rates in 2020 if Brexit is resolved smoothly later this year or early next year, but the degree of uncertainty is simply too great to explicitly call for hikes.”
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