FXStreet (Delhi) – Philip Rush, Research Analyst at Nomura, suggests that following the return of our Fed call to December, we are keeping our BoE forecast for a May start to the hiking cycle. Dovish comments at the recent Inflation Report may be too hard to retract in time for an earlier move, the analyst adds. Key Quotes “The more advanced position of the UK economy means the UK should still hike well ahead of current market pricing. The Fed’s hawkish turn should be more relevant than the ECB’s dovish surprise in October.” “The UK and US economies have clearly been in a far more advanced cyclical position relative to the euro area and Japan for a long time now. And we still believe the UK to be the front-runner of them all, just not in terms of the monetary policy setting.” “With new risks continuously surfacing to replace those subsiding, the MPC has followed a much more dovish path than what a central focus on domestic economic performance would normally dictate. Indeed, focusing solely on those underlying domestic pressures would likely have prompted a BoE rate hike a long time ago, in our view.” “But the UK is a geographic, not an economic island, so it has to take account of risks and loose monetary policies elsewhere. As such, the MPC has been wary of going alone and risking unexpectedly large exchange rate moves if the Fed continued to delay. This is why we promptly delayed our BoE call by three months when our US team similarly postponed its Fed call.” For more information, read our latest forex news.