UK Economy & BOE Preview (with Caroline Hepker)

The UK economy faces a stagflationary shock from the Iran war. Energy costs will push headline inflation 1.5 percentage points higher by early next year, squeezing real incomes. The BOE is expected to hold rates but faces a credibility risk if it talks tough without acting. A rate hike may come in July.

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Anna Andrade 4.0

UK Economy & BOE Preview (with Caroline Hepker)

yields

Andrade expects the BOE to eventually hike in July as inflation rises due to energy costs. Markets are no longer pricing in rate cuts. This suggests UK yields could move higher in the medium term as the BOE acts to contain inflation.

Caroline Hepker

The UK faces political turmoil alongside economic challenges. Walk us through the economic picture.
Anna Andrade

The UK had a strong start to the year with 0.6% QoQ GDP growth, but the outlook is gloomy due to the Iran war. As a net energy importer, rising energy costs create a stagflationary shock. We've revised inflation forecasts 1.5pp higher by early next year, squeezing real incomes.
Caroline Hepker

What will the Bank of England do?
Anna Andrade

The BOE will likely hold rates. The notable shift will be in the vote split - more members may favor a hike. The key risk is credibility: if the BOE talks tough but doesn't act, it could lose credibility. A move may come in July.

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