UK investors will be closely watching the Bank of England’s monetary policy report for any shift in the balance of views among rate-setters around future wage growth and the economy, which could potentially alter the expected path for interest rates.
Financial markets are betting that the BoE will hold rates at 3.75 per cent when the Monetary Policy Committee announces its decision on Thursday. Barclays, Capital Economics, HSBC and Deutsche Bank all expect two dissenters to vote for a cut — external committee members Swati Dhingra and Alan Taylor.
In December, the BoE stressed that its regular survey of annual pay conditions “would be a key input into the February MPC round”, as many rate-setters flagged concerns over forward-looking indicators of wage growth in their individual commentaries.