BoE: hiking rates early (call change to May-18)
- Hawkish warnings from the BoE have been mounting, with Andy Haldane now indicating a desire to raise rates in 2017, despite historically being a dove.
- Weak wage growth no longer appears to be able to block a rate hike amid reduced intolerance to making a hawkish policy mistake. The risk on this dimension of the reaction function is now crystallised into my baseline forecast.
- In my first change of modal BoE call since launching in November, I now expect the first hike in May 2018 (previously Aug-19), with risks skewed slightly earlier.
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