BoE: The rate hike window is closing - ING

Analysts at ING suggest that for the Bank of England, there are really two things that will matter most this year and the first is Brexit; the likely agreement-in-principle of a transition period by the end of the first quarter would be positive, averting the tail-risk of a "cliff edge".

Key Quotes

“That still leaves a number of open questions, including whether a two-year transition is long enough, and whether firms will boost investment without having firmer details of the UK's future trading relationship.”

“The second is wage growth; policymakers are looking for a sharp pick-up over coming months. There are signs of skill shortages in certain sectors, prompting employers to raise pay in a bid to retain staff. That said, the economy is still struggling and input prices are still rising, meaning some firms may continue to take a more conservative approach to wage setting.”

“A rate hike still isn’t guaranteed this year - although this is a close call. Whatever policymakers decide, we think they have a fairly narrow window before the summer to squeeze in another rate rise, with Brexit noise likely to ramp up in the autumn. Recent BoE speakers haven’t guided markets towards a February rate rise, which leaves May's meeting as the most realistic hiking opportunity.”