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BoE MPC split on rates for the first time in over three years - ING

FXStreet (Łódź) - James Knightley from ING believes that the 2-7 BoE MPC vote in favor of a rate hike in August doesn't mean we will see a rise as soon as this year.

Key quotes

"The minutes stated that 'for most members, there remained insufficient evidence of inflationary pressures to justify an immediate increase in Bank Rate'."

"They felt that the rate of growth would moderate while inflation was expected to 'reach the 2% target only at the end of the three-year forecast period'."

"They also cited weak wages and the possibility labour market slack may have been greater than previously thought. By delaying rate hikes it would 'allow the expansion to become more entrenched."

"Indeed, raising rates too early in the absence of wage rises could increase 'the vulnerability of highly indebted households', while also adding to upward pressure on sterling."

"We suspect that Weale and McCafferty will remain in the minority for a while yet."

"Yesterday’s low inflation numbers, the lack of wage growth and concerns about Eurozone growth – the UK’s largest trade partner, suggest that in the absence of upside activity data shocks the majority will continue to opt for the status quo in the next few months."

"Indeed, it currently looks more likely to be February when we see the first rate rise than our current published forecast of November."

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