RSM yesterday predicted a measured short-term position from the Bank of England (BoE), yet with one eye on an interest rate hike in the second quarter. That prediction proved in-line with today’s statement. However RSM believes the rate of increase will remain slower than in the US over the medium to long term.
The Bank of England has indicated that the pace of interest rate increases could accelerate if the economy remains on its current track.
Tony Edwards, corporate finance partner at RSM in Newcastle said: ‘In this environment Central Bankers remain cautious. Markets should experience volatility, it’s not healthy otherwise, but there is no sense in stoking panic. The measured short-term commentary from the BoE today was therefore expected. However the tone over how quickly interest rates might move in the medium term is telling, and perhaps a little more hawkish than some might have expected considering existing sentiment which continues to be heavily influenced by Brexit. Nonetheless we still expect rates in the UK to rise more slowly than in the US and, in all likelihood, to a lower level.’