Investec acknowledges that it is far from certain however that rates will move from the 0.5% level this year, and this is 'not a high conviction view.'
In Investec’s estimation nothing is likely to change at the upcoming September monetary policy meeting as little change in the UK economy has taken place since the August meeting. October is also, on balance, seen as likely to be too early by Investec’s economists.
Leaving it much later than November would mean the expected general election in May 2015 would be a too close for comfort both for the government and the MPC, Investec noted.
Should the rise not come in November, Investec considers it therefore more likely to come after the election than before. This is because while Investec is sceptical of there being any deal in place between the government and Carney, it would be highly unusual for the Bank of England to choose to act in a way which could impact the outcome of an election.
Leaving a move until a few months past the election would run the risk of it being too late to have the desired effect, so this tips the balance of probability towards the November meeting Investec argues.
