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BoE Forbes: UK to Hike Rates When Wages Pick Up

Tuesday, Jan 26 2016
The Bank of England (BoE) should begin rising interest rates as soon as wages and unit labor costs begin to increase more, the text of the speech due to be delivered on Tuesday by BoE policymaker and rate-setter Kristin Forbes showed today. "Once this upward momentum in wages and unit costs builds, as I expect it will, then it will be time for the UK to follow the example of its fellow 'city' and begin the slow and gradual process of tightening monetary policy. The relatively smooth experience of 'lift-off' in the US suggests that, at least in this 'Tale of Two Cities', there will not be a revolution," Kristin Forbes will say during her speech to the Henry Jackson Society in Parliament on Tuesday.
 "The UK labor market still has some slack and firms are not under so much pressure to find and keep workers that they need to pay more. With slow wage growth, inflation currently at 0.2%, and downward price pressure from cheaper energy and sterling's past appreciation, there appears to be little risk of inflation suddenly spiking to well above our 2% target in a way that would require increasing interest rates soon," Forbes will say.
 
Sterling is currently being traded around 1.42 handle. Pair is likely to find support around 1.4150 handle and resistance above 1.43 level. There will be no major data releases in the rest of the session.
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