Earlier today, the Bank of England’s 9-member Monetary Policy Committee voted 7-2 to keep interest rates unchanged at 0.75%. It also kept its Asset Purchase Target unchanged at £435 billion together with its £10 billion Corporate Bond Target. Before the announcement, analysts suggested that the vote could be 5-4, as two members signaled their willingness to ease interest rates as an insurance policy for a slowing global economy and uncertainty over the Brexit transition period.

The UK labor market is very tight which explains today’s reported increase in average weekly earnings which expanded by 3.0% annualized for the three-month period ending in September. Excluding bonuses, the increase was reported at 3.2% annualized. This marked the fastest expansion since December 2008. The unemployment rate was reported at 4.1%, up from the previous month’s 43-year low of 4.0%. While wages are expanding, output per working hour is lagging and only expanded by 0.1% in the third-quarter while hours worked rose by 1.0%.

When the Bank of England (BOE) had their last Monetary Policy Committee (MPC) meeting on February 8th, market watchers priced in a 51% chance of an interest rate increase in May. Fast forward two weeks and the odds have now jumped to 83%. Central banks in developed markets have been reluctant to increase interest rates since they were slashed to all-time record lows as a result to the global financial crisis from a decade ago.