UK: Wage growth data eyed for BoE’s May rate hike prospects - ING

Potential upside risks to Wednesday's UK wage growth data could see markets think more carefully about a May rate hike, according to James Smith, Developed Markets Economist at ING.

Key Quotes

“Wage growth data is very much in vogue at the moment. An unexpected surge in US hourly earnings growth has been widely cited as being at least partly to blame for the recent market turmoil. And with the Bank of England increasingly pinning the chances of further rate hikes on accelerating pay growth (alongside Brexit progress), markets will also be watching Wednesday's UK jobs report closely.”

“Alongside a further pick-up in employment growth (185k), we expect the key measure of wage growth (which excludes bonuses) to hold firm at 2.4%, although the risks definitely lie to the upside. A positive surprise would be another sign that pay growth is gaining traction, although what's less obvious at this stage is why exactly the recent trend has been so much stronger, or indeed whether this upward momentum will stand the test of time.”