ING economist, James Smith, says wage growth points to a summer rate hike by the BOE
Smith says that the latest wage data could prompt a bit of a rethink considering how markets have been increasingly skeptical towards the possibility of the BOE raising rates in August.
On the jobs report earlier, Smith notes that "at 2.9%, earnings growth excluding bonuses is now running at the fastest rate since mid-2015 and will make the Bank of England more confident that its optimistic stance on wage growth is bearing fruit".
He argues that there is nothing in the report to make the central bank doubt its outlook on wage growth, and says that "given that policymakers have cited rising pay pressure as a key justification for tighter monetary policy, we think markets are underestimating the risks of a summer rate rise".
Adding that policymakers will be keen to raise rates in August if the assumption that Q1 dip in activity data was much to do with ill weather.
Well, certainly on its own the wage data here is encouraging (though headline reading is lower than prior, so it's a bit of a mixed bag) or at least not bad by any means. But there's still the latest inflation report to come next week and a slew of Q2 economic data points still to come in the next two months.
Considering how May's purported rate hike evaporated in a span of a week, the BOE - and market participants for that matter - would have surely learned a lesson or two about getting too ahead of themselves you would think.
