Stefan Koopman, Market Economist at Rabobank, expects the Bank of England to keep rates on hold at today’s meeting as the UK inflation has steadied in May, but the labour market offers a mixed picture.
“The good news is that the strong pace of hiring indicates that the weakness in the GDP data is not the start of something more structural; the bad news is that the momentum in wage growth faded.”
“Forward guidance is still a cornerstone of Carney’s policy, but the policy outlook has become data dependent. If the economic data holds up in the next month, we think the Bank sees enough reason to raise the Bank Rate to 0.75% in August.”
“The statement and the minutes of this meeting could then be used to lay the groundwork; just a touch of hawkishness should be enough to get the message across.”
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