The Bank of England (BoE) published the results of its February Decision Maker Panel (DMP) survey, which gathered responses from 2,042 Chief Financial Officers of UK firms between February 6 and February 20 [1]. Firms reported that their realized annual own-price growth was 3.7% in the three months to February, unchanged from the previous three-month period [1]. Year-ahead expectations for firms’ own-price inflation edged slightly lower to 3.4%, down 0.1 percentage points from the previous survey, indicating a modest anticipated easing in output price inflation [1]. Consumer Price Index (CPI) inflation expectations also declined marginally, with firms now expecting CPI inflation to reach 3.1% over the next twelve months, compared to 3.2% previously. Three-year-ahead CPI inflation expectations slipped to 2.8%, suggesting businesses foresee inflation gradually moving closer to the BoE’s 2% target over the medium term [1].
On the labor market front, firms reported annual wage growth of 4.3% in the three months to February, slightly lower than the 4.4% recorded previously. Year-ahead wage growth expectations remained unchanged at 3.6%, implying companies expect wage growth to slow by around 0.7 percentage points over the next twelve months [1]. Employment dynamics showed modest improvement, with firms reporting a decline in realized annual employment growth of 0.2% in the three months to February, an improvement from the 0.5% dip in the previous period. Expectations for employment growth over the next year increased slightly, rising by 0.3 percentage points to 0.1% [1].
In terms of market reaction, the GBP/USD pair traded around 1.3350 at the time of writing on Thursday, down 0.18% on the day [1].
CONCLUSION
The BoE DMP survey signals a modest easing in inflation and improved employment outlook among UK firms, with expectations for both price and wage growth trending lower. The GBP/USD pair responded with a slight decline, reflecting a cautious market sentiment. Overall, the survey suggests gradual progress toward the BoE's inflation target and a stabilizing labor market.