VIEW: J.P.Morgan: DMP Survey Mixed In August, Still Look For Further Tightening

In the wake of today’s BoE DMP J.P.Morgan note that “the DMP’s realised wage reading rose to 6.9% in August, and the official data are running at least a percentage point higher than the BoE’s forecast.”

• “Services CPI inflation outturns are slightly exceeding the BoE’s estimates too, although the loosening labor market is providing a more mixed picture.”
• “Yesterday Bailey again commented that he thinks the BoE is “much nearer” to the peak of the current tightening cycle. This prompted some suggestion the BoE could pause in September. However, Bailey also stated this view was made on the basis of current evidence, while clarifying that he was not saying the BoE was already at the peak.”
• “We still expect the BoE to hike 25bp in September, reflecting the strength in the wage and price data.”
• “BoE commentary highlights the clear risk of a pause thereafter (vs. our call for a second hike in November). But the Bank remains in data dependent mode, and upcoming releases (including next week’s labour market report) will have a significant bearing on the near term rate path.”