United Kingdom: A February rate hike is on a knife-edge
Whether or not the MPC raises Bank Rate in February is close to a 50:50 call. We marginally favour a hike because Omicron’s economic damage appears modest, the jobs market has tightened and the MPC is likely to significantly revise up its inflation forecast.
What you will learn:
- But signs of secular risks to inflation, particularly a wage-price spiral, are still missing.
- And with pay growth having slowed, there’s good reason to think the inflation narrative will shift to a less disturbing direction in H2 2022.
- With monetary policy operating over a multi-year horizon, we don’t see a pressing need for the MPC to hike in February.
Tags:
Related Services

Post
Trump’s tariffs on Canada would raise regional commodity prices
A blanket 25% tariff on Canadian imports to the US could have a significant impact on commodity prices, squeeze profit margins of Canadian exporters and raise prices for US end-users.
Find Out More
Post
Chinese policy is unlikely to shift due to announced tariffs
US President Donald Trump's announcement of an additional 10% tariff on imports from China was in line with our baseline expectation. But the immediacy of implementation, the blanket style of tariffs, and the inclusion of stronger language around retaliation in policy documents still add significant uncertainty to our forecasts.
Find Out More