That's what ING and RBC believes
Both firms are of the view that a long extension to the Brexit deadline could be enough to boost chances of a rate increase in August this year. Here's what they have to say:
"We think a long extension, of let's say one-year or over, will definitely bring the BOE back into play, especially if one considers the strength of the labour market. A shorter extension on the other hand, will delay any potential rate hikes as the BOE would like to get political uncertainty behind us." — RBC strategist, Vatsala Datta
"If the UK gets a long-term extension of nine to twelve months to Article 50 in the coming days or weeks, this can perhaps give businesses and households a little more breathing room to relax and spend or invest. As such, the prospect of a BOE rate hike later this year remains pretty strong." — ING chief international economist, James Knightley
That is certainly something worth considering but there's still plenty of obstacles to navigate through before we get here. Of note, the view is subject to any long Brexit delay materialising so let's see how things shape up first before getting all jumpy on this matter.
As for market pricing currently, there isn't any rate hikes priced in until at least 2020 as of today. I wouldn't expect that to change significantly even if a longer Brexit extension is granted as the UK economy still has to deal with plenty of uncertainty during the interim. The only thing going for it is a more solid labour market at this juncture.
