Schroders predicts 'faster than expected' rate rise as UK growth upgraded

Schroders has upgraded its figures for 2018 and 2019 by 0.1% and now expects growth of 1.7% and 1.5% respectively, "thanks largely to the stronger outlook for its major trading partners".

This, it says, is despite the UK going from being one of the best-performing economies between 2013 and 2016, to being the worst performing economy in the G7.

As a result of this growth, Schroders now expects rates in the UK to hit 1.25% by the end of 2019.

It says the Bank of England is "ready to hike faster due to concerns that supply constraints will cause inflation to rise". Schroders expects the Bank to raise interest rates once in 2018 and twice more in 2019 to 1.25%.

It predicts 2018’s rate rise to arrive in November, but says markets suggest it could be as soon as May.