BoE: Big question marks over 2018 rate hikes - ING

Be it at the September meeting or in subsequent comments, the Bank of England has made it pretty clear that a November hike is very likely, notes the analysis team at ING.

Key Quotes

“The committee appears keen to get out of the "emergency mode" it initiated after the Brexit vote, and with central banks across the globe moving towards the exit, the Bank won't want to get completely left behind.”

“But there's a myriad of reasons why it's hard to envisage a series of rate hikes over coming months. One major consideration is wage growth. True, we've seen a tentative pick-up over recent months, but this appears to be largely down to a higher national living wage rather than anything more fundamental. Consumer spending is also still very fragile given the ongoing real wage squeeze, and even though inflation has spiked, this is almost entirely a sterling and oil story.” 

“Add in all the latest Brexit uncertainty surrounding the transition period and the possibility of "no deal", which means companies will stay cautious over investment and hiring for the next few months, and it looks like any tightening from the Bank beyond November will be very limited.”