It’s going to be ages until we see rate hikes in Europe, at least based on current market expectations. A very long time.
Take the chart below, supplied by ANZ, as a prime example. It shows the number of months until the Bank of England (BOE) and European Central Bank (ECB) are expected to deliver a rate hike, according to current market pricing.
Not until 2020 for the ECB, and that extends to late 2021 for the BOE.
Martin Whetton, Daniel Breen and Katie Hill, strategists at ANZ, have taken inspiration from ’80s pop icon, Risk Astley, to describe the current market view, tweaking the lyrics to his smash hit ‘Never going to give you up’.
“Never going to lift you up,” the trio say.
Given the level of many financial assets at present, it’s a safe bet that many in markets are also hoping that they’ll “never let them down” and “never run around and desert them”.
The Bank of England monetary policy committee will announce its June rates decision at 9pm AEST on Thursday evening.
A majority of economists believe the BOE will cut its official bank rate to 0.25%, marking the first time that the bank has moved interest rates since February 2009.
You can read more about it here.