In the immediate aftermath of the UK referendum, central bankers have concentrated on providing verbal reassurance, but they may soon back their words with action. We think the Bank of England will cut its key policy rate to only 0.25% in July or August and leave it unchanged throughout 2017, while the ECB will probably increase both the size and duration of its QE programme before long. However, with the markets already stabilising, the US economy recovering and inflation pressures building, the Fed is still likely to raise interest rates at least once before year-end.
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