BoE focus will shift from pace of rate hikes to level of rates

The news that higher interest rates are starting to influence the economy will at some point soon prompt the Bank of England to start thinking more about the appropriate level of interest rates rather than the pace of rate hikes. But for it to take its foot off the brake, we think the labour market needs to become less tight and there would need to be a notable moderation in wage growth and price/wage expectations. That will happen, but perhaps not before interest rates have been raised from 3.00% now to 4.50%.