Data published today by the Office for National Statistics (ONS), as well as concerns about the consequences of the banking collapse in the United States - the largest since 2008 - forced market participants to reassess the prospects for monetary policy of the Bank of England.
The ONS reported that in the three months to January wage growth slowed substantially, with the headline rate excluding bonuses declining to 6.5% from 6.7%. The annualized rate of three-month-on-three-month growth in private-sector wages tumbled to 5.6% from 6.7% in December, an issue specifically highlighted by the central bank's monetary-policy committee in its minutes.
According to interest rate futures, investors now estimate a roughly 40% probability that the Bank of England will maintain the status quo at its March meeting. Thus, the chances of keeping the interest rate at 4% increased sharply compared to last week (then the probability of this event was estimated at only 10%). Meanwhile, the probability of a 0.25% rate hike at the March meeting is now about 60%.
At the first meeting in 2023, the Bank of England raised the interest rate by 0.50%, to 4% from 3.5% per annum, as most analysts expected. The rate was raised following the results of the tenth meeting in a row and reached its maximum value since 2008.