BoE: First rate hike seen in mid-2023 – UOB

Lee Sue Ann, Economist at UOB Group, reviews the latest BoE event.

Key Quotes

“At its June meeting, the Bank of England (BOE) judged that the existing stance of monetary policy remained appropriate.”

“The BOE also added that global price pressures have picked up further, but suggested that financial market measures of inflation expectations show that this near-term strength is expected to be transitory.”

“The debate on a 2022 versus 2023 rate hike is definitely heating up. While we certainly would not rule out an earlier move, our base case for now is for the first rate hike to come in mid-2023. There are certainly reasons to wait amid lingering uncertainties. Unemployment later this year is a major downside risk and it remains unclear how well the jobs market will hold up once government support ends. As it is, policymakers in the UK have taken a leaf out of the Fed’s book by signalling it wants ‘significant’ progress on spare capacity before thinking about hiking.”