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Analysts at TD Securities note that the BoE’s MPC explicitly signalled that Bank Rate will need to rise more quickly than markets currently expect.

Key Quotes

“They upgraded their growth outlook across all three years, and inflation trends up and overshoots over the forecast, implying the need to tighten policy in coming quarters.”

“FX: Despite its nominally hawkish overtones, the currency market all but ignored the May MPC meeting. We think the MPC’s intent to hike rates will help provide some support for GBP in the weeks ahead, but do not think it will become its single defining characteristic.

Political concerns are returning to the fore. From a bigger-picture perspective, we note the BoE has followed the Fed in delivering a less-dovish message. It is very early in this process, but it appears the G10 central bank “race to the bottom” may be nearing its finish line.”