BoE to hike in Q2 2016?

As UK labour market continues to tighten and the underlying wage growth is trending up, the case for a hike is building and thus the BoE is expected to hike in Q1 16, probably February. Consensus among analysts has now moved to Q2 16 (although roughly one-third still expect a hike in Q1). 

"The risk is also tilted towards a hike later in 2016, but the underlying positive trend in wage growth will, in our view, put more pressure on the BoE to tighten than currently recognised. Market pricing continues to be too dovish in our view", says Danske bank.

The next MPC meeting is on next Thursday (5 November). At this meeting the new Inflation Report will be published. The Bank of England has already announced that it would review the pass-through of exchange rate movements to UK import prices. 

The reason is that Bank of England has noted that import prices have not declined as much as suggested by the appreciation of GBP. The strong GBP is one reason why the BoE is hesitating, as the BoE members are unsure whether the downward pressure from lower import prices will continue