Smooth Brexit may mean faster UK rate increases, says BoE
Bank of England’s latest forecasts are based on the assumption that Britain avoids a so-called cliff edge when it leaves the EU
London — The Bank of England (BoE) said it may need to raise interest rates faster than the market suggests, assuming that Brexit goes well. While it did not say what deal would be best for the UK, its latest forecasts are based on the assumption that the adjustment to a new relationship with the EU is "smooth". That means avoiding the so-called cliff edge where the UK leaves after the two-year negotiation period without transitional arrangements in place. If the economy grows as expected, "then monetary policy will need to be tightened by a somewhat greater extent over the forecast period than the very gently rising path implied by the market yield curve underlying the May projections", the monetary policy committee said on Thursday in London.
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