Fitch: UK rate rise has little growth impact, shows global shift

Eren Sengezer FXStreet

"The Bank of England's (BoE) decision to increase UK interest rates by 25 bp partly unwinds the monetary stimulus it provided last summer, and is unlikely to have a large economic impact," Fitch Ratings said in its latest report.

Key quotes

The BoE looks set to tighten policy slowly.

We think another increase is unlikely in the next 12 months, given the impact of Brexit uncertainty on the outlook for investment.

Today's decision does not alter our UK growth forecasts , which see a net trade boost partially offsetting slower domestic demand this year, enabling real GDP to rise by 1.5%, before slowing to 1.3% next year.

We forecast inflation to slow next year, averaging 2.5%, but this would still be above the BoE's 2% target.

As output gaps close, central banks around the world are generally refocusing on policy normalisation.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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