BoE: MPC decision is increasingly becoming a non-event – TDS

On Thursday, the Bank of England (BoE) will announce its decision on monetary policy. A 75 basis points rate hike is mostly expected by market participants. Analysts at TD Securities look for a 75 bps hike. They consider it could have a small impact on markets.  

Key Quotes: 

“Despite the period of heightened policy uncertainty, this week's MPC decision is increasingly becoming a non-event. We, along with the broad consensus, look for a 75bps hike, with a single dissent for a 50bps hike.”

“Markets are well priced for a 75bps hike. We doubt that the BoE is able to provide much certainty ahead of the budget. Thus, we expect Wed evening's Fed decision to weigh on GBP rates rather than the BoE.”

“A cautious tone is likely to weigh on GBP, reflecting the poor real rate and growth backdrop. With GBP now back to HFFV (near 1.16 - short-term fair value estimate), the short-term fiscal premium has been priced out. In turn, we like selling GBP rallies, consistent with MRSI's negative bias.”