FED TO LEAD BOE INTO SLOW AND GRADUAL RATE HIKES

The over-riding consensus amongst portfolio managers, analysts and finance specialists surveyed is that the US Federal Reserve will start hiking its policy rate before the Bank of England (BoE).

Respondents are less confident about the exact timing of the start of the Fed and in particular BoE hikes. The consensus forecast is for the Fed to pull the trigger in September but for the BoE to wait till Q1 2016. There is an overwhelming view that the rate hiking cycles will be slow and gradual, particularly in the UK, with the Fed and BoE expected to hike rates by only 96bps and 67bps, respectively, between now and end-2016.

The survey consisted of five sets of questions and was open from 27th May (12:00) to 30th May (12:00). Respondents could chose to skip one or more questions. 61 respondents filled in the survey, four sets responses were disregarded due to inconsistent answers. 40% of the 57 respondents are portfolio managers, 20% analysts/strategists with the remainder being finance and industry specialists. Please see Appendix for complete survey data. Thank you to all who responded to this survey.

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