💡December Bank of England Survey Reveals Divergent Views

The most recent survey from the Bank of England Decision Maker Panel (DMP) in December is likely to maintain a division within the committee regarding the outlook on interest rates.

Those leaning towards a more cautious approach will highlight the ongoing decline in inflation expectations. The 1-3 year ahead expectations, calculated on a three-month average basis, dropped by 4.3% and 3.1%, compared to the previous figures of 4.6% and 3.2%, respectively.

On the contrary, proponents of a firmer monetary stance will emphasize the persistent lack of advancement in wage growth. Year-ahead expectations for wage growth increased by 0.1 percentage points to reach 5.2%.

Additionally, Catherine Mann, a dissenting member with a hawkish stance who advocated for a 25 basis points hike in the December meeting, had previously highlighted concerns about price pressures originating from firms' expectations. This aspect was a crucial factor in her decision to vote in favor of higher interest rates.