Following the recent ‘on-hold’ decision from the Bank of England, Economist at UOB Group Lee Sue Ann said the central bank should remain vigilant on Brexit headlines.
Key Quotes
“After raising the bank rate to 0.75% in August, the BoE is set to remain in a wait-and-see mode. The biggest unknown for UK policymakers remains the terms of Brexit. With the government working on contingency plans for a no-deal Brexit, BoE Governor Mark Carney has extended his stay at the BoE until early 2020. On Thursday, he even attended a Cabinet meeting to discuss preparations”.
“We expect the MPC to continue voicing the concerns over Brexit risks, especially the scenario of a no-deal Brexit that could turn increasingly worrying in terms of inflation rising above the targeted levels as a result of GBP’s underperformance. The next rate hike is currently priced around the May 2019 Inflation Report, but we see no further moves for a year at least”.
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