Interest Rates to Rise Early 2016

Stronger wage pressures and further strength in the domestic economy have brought forward market expectations for the first official interest rate rise to the early part of 2016

J.P. Morgan Asset Management 6 August, 2015 | 5:05PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Stephanie Flanders, Chief Market Strategist for Europe, J.P. Morgan Asset Management comments on Super Thursday.

With inflation now expected to be a little weaker, and productivity somewhat stronger, the Bank’s policy makers do not think a rate rise is in any way imminent – nor is it likely to happen before the end of 2015. Unlike many major economies, the UK is not trying to recover on the back of a weak currency, but the Bank does not want investors to think sterling is a one way bet.

There has not been a major change in the inflation and GDP forecasts since the last report in May, but stronger wage pressures and further strength in the domestic economy have brought forward market expectations for the first official interest rate rise, with investors now looking at the early part of 2016 for that historic decision rather than later in the year.

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About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.

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