Bank of England: August meeting remains key - Lloyds  Bank

Today the Bank of England left monetary policy unchanged. Analysts from Lloyds Bank point out that the August meeting remains key for delivering easing as well as laying out further possible options.

Key Quotes:

“Disappointing market expectations in advance of the decision that pointed to a 80% probability of a 25bp easing, today’s MPC policy announcement saw Bank Rate unchanged at 0.50%. The MPC minutes released alongside revealed the decision as split, with Gertjan Vlieghe alone in preferring an immediate 25bp cut.”

“As the MPC will already be in the course of discussing the projections of the August Inflation Report, and with the August MPC decision just 3 weeks away, these discussions are likely to be well advanced. Still, even by the time of August’s decision, the extent of data post-dating the referendum will still be limited. As such, the MPC’s signalling of its intentions for next month is unusual, but the intended easing seems to largely reflect a matter of timing.”

“Overall, we see today’s non-action – running counter to Governor Carney’s fairly explicit hint in his speech of the 30 June – as rather incongruous in its messaging of easing that would have otherwise been expected to come at August’s meeting. Also notable by its absence is any indication of the range of options the MPC are considering for loosening in August, noting only ‘the exact extent of any additional stimulus measures would be based on the Committee’s updated forecast’. Overall, August’s meeting remains key for both delivering the easing which now seems to explicitly signalled to come, data irrespective, as well laying out the as further possible options.”