Bond managers: BoE will backtrack on rate rise guidance

clock • 3 min read

Fixed income managers have cautioned the Bank of England (BoE) will be forced to backtrack on its forward guidance measures as it has been too pessimistic over the state of the UK economy.

Last week, new BoE governor Mark Carney indicated the Bank will not consider raising interest rates until the unemployment rate falls to 7% (from a current level of 7.8%) – something it does not expect to happen until the second half of 2016. However, bond managers said a combination of better economic data and caveats to the Bank’s guidance are leading to UK rate hike expectations being brought forward. “If you take a look at what the PMI data is indicating, growth could well be a lot stronger than the BoE has predicted, which will force Carney to backtrack on his words,” said Bob Jo...

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