BOE's Vlieghe: Rate cuts more likely than hikes if no-deal Brexit materialises
Comments by BOE member, Gertjan Vlieghe
- But says that rates would need to rise in a smooth Brexit scenario
- Outlook has deteriorated since February
- UK Q2 growth could be slightly negative
He argues that a smooth Brexit would mean stronger investment, wages and underlying inflation in the UK economy and says that would help to justify 'limited and gradual rate increases'. Adding that it might mean rates at 1% in a year, 1.25% in two years, and 1.75% in three years' time.
Though as the headline suggests, he said that if a no-deal Brexit materialises, his view is that the central bank would have to hold or cut more likely than a hike in response to temporarily high inflation due to currency and tariff effects.
It's very much similar commentary to what we have heard from BOE members in the past few weeks but just take note of the slight downwards tilt towards the economic outlook. That could be something to watch out for in the coming months if the BOE decides to shift around their monetary policy stance.