Deutsche Bank forecast a +50bp Bank of England rate hike at the next meeting

Deutsche Bank cite the labour market data published Tuesday that showed:

• yet again wage pressures have been stronger than we previously assumed

The data is here:

• AWE Reg Pay picked up to 7.3% (3m/YoY) following upward revisions to past data.

On the Bank of England, what DB is now expecting:

• For now, evidence of still more persistent wage pressures will keep the MPC’s foot on the accelerator.
• A second consecutive 50bps hike now looks more likely than not. Accordingly, we change our call for August, and now expect a 50bps hike at the next BoE meeting, taking Bank Rate to 5.5%. We keep our terminal rate projection fixed at 5.75%, however, and see the MPC delivering at least one further quarter point hike in September.
• Risks to our terminal rate projection are tilted firmly to the upside. We will reassess our view following the release of both the Financial Stability Report and the June CPI print.

The next BoE meeting is August 3.

This article was written by Eamonn Sheridan at www.forexlive.com. Source