Bank of England interest rate hike will be a ‘policy mistake’ says Credit Suisse


Here’s why

Swiss bank analysts have said Wednesday, that they believe that interest rates will rise in November, they said in a note today.

The analysts said: “We think a rate hike in November in the backdrop of weak growth, high currency-generated inflation but weak wage pressures and uncertainty is likely to be a policy mistake.

“We think the BoE has misdiagnosed the amount of slack and growth potential in the UK economy.

“The hike is unlikely to have a profoundly negative impact on the economy, but there is a risk of a non-linear response to the first-rate hike in 10 years.

“A tighter response to an [entirely]externally driven inflation overshoot today runs the risk of a sustained inflation undershoot in the future.”

Monday, HSBC analysts also said in a note that they are expecting the BoE to raise rates this November and again in 2018.

HSBC bank said that they expect rates to be raised by 25 points, possibly starting from November this year, going up to 0.75 per cent.

Last week the monetary policy committee (MPC) voted to keep interest rates at 0.25 per cent however, they have hinted this could rise.