TDS expects that Bank of England to continue its monetary tightening policy in 2018, with interest rates expected to rise again by May 2018. The Monetary Policy Committee may continue to raise interest rates at a slow pace as uncertainty continues to dominate economic developments of Brexit.
In the long run, the institution's expectation is that the interest rate will be raised twice in 2019 to control the acceleration of inflation growth, but the Bank of England's tone is likely to continue cautious about economic prospects.
Monetary policy will remain dependent on the impact of the fall of the pound on inflation, supply and demand levels, improving labor market conditions, the pace of wage growth, and the outcome of Brexit negotiations scheduled for completion in the first quarter of 2019.
