Will the BoE Raise Interest Rates Before Brexit?

According to MPC member Michael Saunders, the Bank of England may have to raise interest rates before Brexit concerns were resolved.

Arslan Butt•Tuesday, June 11, 2019•1 min read

The UK economy has taken another downturn

According to Monetary Policy Committee member, Michael Saunders, the Bank of England may have to raise interest rates before Brexit concerns were resolved. Financial markets, on the other hand, are expecting BoE to maintain a dovish outlook and possibly even cut rates over escalating trade tensions and potential slowdown in economic growth.

Saunders made these comments while speaking at Southampton’s Solent University, adding that the BoE will have to shift from being dovish towards a neutral outlook faster than markets were anticipating. Last month, BoE Governor Mark Carney’s policy outlook had also mentioned that inflation could overshoot the central bank’s target if rate hikes didn’t come faster than market expectations.

Saunders also cautioned against waiting till it was too late to hike rates when inflation from all quarters of the economy showed signs of trouble. The last two rate hikes happened in November 2017 and August 2018 after Brexit was announced. The next rate announcement from the BoE is expected on June 20, but it remains to be seen if the central bank will change interest rates then.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.