ING: Bank of England rate hike on Thursday unlikely to be last

On February 3, ING developed market economist James Smith and senior interest rate strategist Antoine Bouvet said in a report that the message from the Bank of England shows that the bank is laying the groundwork for ending the current interest rate hike cycle.

The Bank of England’s cut in inflation forecasts, muted language on future rate hikes and warnings on growth suggest the peak in deposit rates is near. Still, Thursday’s rate hike is unlikely to be the last, as wage growth remains high.

Also, the BOE will not cut rates as quickly as the Fed, as core inflation in the UK is likely to be more sticky. This suggests that BoE policy is unlikely to ease for at least a year.