UK PMI's disappoint, yet BoE still on track for May rate hike - Scotiabank

Analysts at Scotiabank explained latest PMI result in anticipation for a 25bp rate hike from BoE in May.

Key Quotes:

"UK CIPS services and composite PMI data were disappointing in Mar, falling to 51.7 and 52.5 respectively; modest declines had been expected from Feb’s levels when both measured 54.5."

"Weather related challenges – the “Beast from the East” snowstorms – account for much of the softness, which pulled service sector growth down to its weakest in two years."

"Activity will recover from the weather hit and BoE policy makers should look through the short-term impact on economic activity."

"Markets continue to price in around 80% risk of a rate hike in May. We anticipate a 25bps hike in the BoE target rate."