Mike Riddell, fixed income portfolio manager at Allianz Global Investors, said economic data in the UK had been “surprisingly strong” and beating consensus predictions, but warned markets were expecting an interest rate hike that seemed “ambitious”.
“The most recent UK data have been weakening: UK house prices are less strong and have even been falling in some areas of London, and business surveys have been less rebust.
“Perhaps most crucially, there is still no sign of business investment picking up. Indeed, quite the opposite is true.
“The strength of the UK economy lately has been driven by the consumer – and with UK savings rates so low, this is not sustainable.”
“Against this backdrop we believe it is highly unlikely that the Bank of England will hike interest rates any time soon.”
