The Timing Of The Central Bank Raising Interest Rates Is More Complicated.

Senior investors in the investment institutions say that the British market has not even begun to consider the possibility of a British referendum to return to Europe next year, which exacerbated the risk that all of them broke out when the voting time approached and made it possible for the Bank of England to raise interest rates.

In this week's Reuters Summit on investment prospects in 2016, global asset managers said that as the referendum did not set a definite time, the proportion of "Britain's withdrawal from Europe" was more and more similar. So far, the close poll results have not attracted the attention of most market participants.

The market has not gradually digested the risk, which constitutes another major uncertainty for the trend of British government bonds, stock market and sterling in the coming year. Investors worry that once the referendum time is confirmed, there may be a shock in the market, which also cast a shadow over the widely anticipated interest rate increase of the Bank of England next year.

So far, there is only a slight nervousness in the market. The implied volatility of the one year Sterling / Euro foreign exchange option, which hedged with price volatility, jumped to three and a half high last week.

The implied volatility of the one year Sterling / dollar hit a seven month high.

But in the UK stock market and bond market, and even the pound's spot market, it is hard to see that there is a premium related to Britain's withdrawal from Europe.

"The retreat has not really been actively discussed - we have said that this is the core part of our investment strategy, but the discussion on this topic has not reached that level," said Ken Lambden, chief investment officer of Baring Asset Management at Reuters investment outlook summit. "I don't think anyone will really believe it will happen."

"So if the process goes forward, the polls start to show that this is about to become a reality, and I think the pound will be extremely weak," Lambden said. The long-term impact may be mild, but it can not be ruled out in the short term.

British Prime Minister Cameron promised to hold a referendum on the UK's stay in the EU by the end of 2017, but investors bet that the referendum will take place around the middle of next year or the end of next year.

Carney, President of the central bank, basically ruled out the possibility of raising interest rates in early 2016 this month, saying that if interest rates remained unchanged next year, inflation would rise slowly from near zero. In the second half of the year, a referendum on the referendum which triggered the risk of turbulence may force him to further postpone the interest rate rise.

The digital asset management manager said that as the referendum approached, the pound might be particularly vulnerable, even worse than last year's independence referendum in Scotland.

But many people think that the impact of Britain's retreat to Europe may be temporary, and the sharp fluctuations in sterling itself may provide a tightening for the Bank of England after its referendum. policy The timing of market decline should be limited. The Bank of England has repeatedly mentioned that excessive sterling is a reason not to raise interest rates.

Luke Ellis, President of Man Group, said that if the pound fell to $1.45 against the US dollar, it would provide buying opportunities.

But he cautioned that if the Bank of England raised interest rates on the basis of the pound's depreciation before the referendum, the British people voted to stay in the EU, and the pound could rise sharply, thereby lowering inflation. He pointed out that, together with raising interest rates, that would cause a "double" blow to the British economy.

Percival Stanion, head of cross asset strategy at Pictet Asset Management Co, said Britain's withdrawal from the EU would not be a "doomsday decisive battle" for the long term British economy. But it will definitely cause great interference to the internal investment decisions. Finance And the market will be more vulnerable. Stanion believes that the possibility of Britain's withdrawal from the EU is 30-40%.

Mark Burgess, director of investment at Columbia Threadneedle Investments, said that voting out of the EU would damage London's position as a global foreign exchange trading center. "London will lose the market. It is not surprising that Frankfurt will seize the market."

Rod Paris, director of investment at Standard Life Investments, doubts that the Bank of England may be restricted by the referendum. Even if it leaves the EU, "it may not be beneficial - it will bring uncertainty to investors". The Bank of England needs to be convinced that the outcome of the referendum will have a lasting impact on the market and economy, so that it should substantially adjust its monetary policy path.

Market analysts believe the Bank of England will raise interest rates from historical lows in the next summer, but the market suggests that interest rates may rise at some time in the end of the year.

But once the referendum date is fixed, everything can change.

" Carney I do not want to make mistakes. I think he wants a resume with no defects, "said Anne Richards, chief investment officer of ADN.L.

"If he raises interest rates before a referendum in Britain, it may slow down economic growth. This risk is bigger than declaring "let us take the natural course and see the outcome of the British retreat".

Deutsche Bank strategist Oliver Harvey told customers that the autumn referendum plus next year's tightening of fiscal policy may delay the interest rate plan of the Bank of England indefinitely.

"The window for policy withdrawal may now be closed," he said. "If there is no big turn of 180 degrees, the monetary policy committee has abandoned the option of raising interest rates in the first half of next year. The problem is that it may be too late. "