A rate hike from the Fed will probably happen this month, while the Bank of England will raise rates in February, Holger Schmieding, chief economist at Berenberg Bank, had predicted.
Mr Schmieding said markets have priced in a Fed rate rise in September but there could be a bit of short term volatility.
On the Bank of England and the base rate, Mr Schmieding told Money Management’s Spriha Srivastava that if the Monetary Policy Committee sees the Fed raise rates and markets calming down afterwards they may say ‘okay let’s do it the same way, if we want to raise rates, prepare markets for it and do it the same way’.
He said: “We expect a first rate hike from the Bank of England in February next year.
“Rate hikes will be gradual in this county as well. Also, domestic demand is firm enough. You can easily say that with earning growing and the labour market being strong enough, the average Britain does have the money he or she needs to pay a slightly higher mortgage.
“I do not think there will be a lot of concerns about the British economy after the first rate hike. I think that fundamentally speaking, at least fund managers should not have reason to worry.”
