BoE's rate hike likely in Q1, 16

The Monetary Policy Committee (MPC) of BoE remains split with an 8-1 vote on whether to keep the Bank Rate unchanged or raise it immediately. Minutes from the 8 October meeting indicate that most MPC members are not comfortable raising rates with higher uncertainty in the near term. 

In analysts' view, further improvement in the labour market combined with a pick-up in inflation at the beginning of next year will eventually pave the way for a rate increase in the U.K. 

"The BoE is expected to hike in Q1 16, probably in February, followed by two additional rate hikes next year, taking the Bank Rate to 1.25% by the end of 2016. UK rate hike expectations are currently very subdued with the first full 25bp hike priced in January 2017 and while we see little prospect of higher U.K. money market fixings in the short term, we expect fixings to increase more than priced in the forward market from three months and beyond", says Dnaske Bank.