BoE to hike rates as soon as November? - Nomura

Sterling, inflation and the BoE Sterling’s continued slide against the euro, pushing the trade weighted index close to historical lows, is not going unnoticed by the Monetary Policy Committee, explained analysts at Nomura.

Key Quotes:

"Mechanically, the BoE believes a 20% fall in the trade weighted could add 1.5pp to inflation, though in reality much will depend on what has caused the depreciation. 

As for policy conclusions, a decline in sterling that is generated by strengthening overseas activity growth seems more likely to result in a BoE rate rise than that caused by Brexit-related growth concerns, for example. Should domestic inflation pressures and activity show signs of strengthening, as we expect, then the first move up in Bank Rate could be as soon as November this year."