UK inflationary pressures to be more pronounced?

The Bank of England (BoE) will release for the first time ever its rate deci-sion, its Monetary Policy Committee (MPC) minutes and the Inflation Report at the same time. A press conference is scheduled 45 minutes later as well. 

"The new modus operandi is meant to create more transparency, but is likely to cause some turmoil on the markets today, as the MPC meeting is likely to mark a turning point", says Commerzbank. 

While, since the beginning of the year, the MPC members have unanimously voted for keeping the Bank Rate unchanged, some of them, in fact, two, are likely to have deviated from the consensus now. Ian McCafferty and Martin Weale, who voted for a rate hike back in the months from August to December 2014, probably supported a normalisation of monetary policy at this MPC meeting. 

The minutes of the preceding meeting already suggested that they are increasingly worried about inflation, as surprisingly strong wage growth triggered concerns that inflationary pressures might be more pronounced than expected so far. To some extent, these concerns were offset by uncertainty about Greece. 

As the mayhem has died down and negotiations about a third bailout package have started since the preceding meeting, this last hurdle for a rate-hike vote has been cleared. Some market participants speculate that David Miles might support a rate hike, too. 

"However, with Miles due to retire from the MPC at the end of the month, his vote is of minor importance. Even if three, instead of the expected two, MPC members voted for a rate hike, investors can take a close look at just who broke the ranks before euphorically starting to buy GBP", added Commerzbank.