Sterling jumps as RBS predicts rate hike next year

RBS has revised its Bank of England forecasts, scrapping its prediction of further QE and forecasting an initial hike in UK interest rates in the second quarter of next year.

RBS said a policy shift is now underway at the bank - more "evolution than revolution", but one that indicates MPC members are now more concerned about sticky inflation. The group therefore no longer expects further QE purchases, having previously forecast an additional £50bn in the second half of 2012. Analysts Ross Walker, Richard Barwell and Gareth Anderson said the MPC's shift in focus will not be unduly affected by this week's poor GDP data, pointing to the increasingly mixed signals between official data and surveys showing healthier underlying activity. The team said their e...