The Bank of England (BoE) are set to hold rates at 0.75% this week, due the continued “fog” of Article 50 delay brings fresh Brexit uncertainty.
The Banks quarterly Inflation Report forecasts signs that Brexit stockpiling has boosted the recent economic growth figures. The data suggests the economy has expanded by 0.4% compared to 0.2% for the last three months of 2018.
The stockpiling was due to the “no-deal” possibility ahead of the original 29 March exit date, and experts are saying this could unwind in April to June quarter.
Earlier this year BoE governor Mark Carney said until the “fog” of Brexit has lifted, we are remaining in wait and see mode.
Philip Shaw, Investec economist said, “The committee as a whole is likely to remain fretful over downside risks to the economic outlook.”
Adding, “The committee’s immediate concerns over a disorderly Brexit could be eased somewhat by the new 31 October exit date.
“However, its worries over the global economic background seem set to remain.
“Indeed, it is probably this latter point which is likely to provide the main argument for keeping rates steady this time.”
Due to stockpiling boosting the first quarter, the Bank is expected to nudge up their growth forecast in the accompanying inflation report up from the original predicted 1.2% in February.
Although consumer prices index (CPI) has remained steady at 1.9% during March, they could up the inflation outlook due to energy prices.
Shaw said, “The MPC will find a case for higher rates increasingly compelling as the year draws on.”
Shaw is expecting a hike of 1% in November however, this is purely based on a Brexit deal actually being reached.
Last week the BoE announced they are on the hunt for a new governor, Philip Hammond will be conducting interviews over the summer.