UK Chief Economist Haldane reiterates his view that the next move is just as likely to be a cut as a hikeSuch cautious statements were echoed later by MPC member and chief economist Andy Haldane, repeating his earlier message that he had no bias on either the size or the directionof future interest rate moves. Accordingly, financial markets pushed back the date of the next policy rate hike from Q1 16 to Q2 16. While we remain of the view that the Bank will hike in Q1 next year, this call will be increasingly seen as a split vote at the MPC being likely to occur by the summer. While next week’s MPC seems too close to the Supplementary Budget presentation on 8 July, the August MPC will likely see those members who had previously been in favour of a hike call for a hike based on solid labour market developments and the reassurance that the low inflation environment has not de-anchored inflation expectations. “Until the August MPC meeting, the crucial agenda items/data releases will be the Supplementary Budget (8 July), inflation (14 July), the Labour Market report (15 July) and most importantly the preliminary estimate of Q2 GDP (28 July)”, says Barclays.
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