BOE Preview: Monetary policy stance to remain accommodative - Barclays

Analysts at Barclay offer fresh insights on what to expect from the BOE policy decision, accompanying minutes and quarterly inflation report slated for release this Thursday.

Key Quotes:

“Recent policy statements by MPC members may reflect differing perspectives regarding the future path of interest rates but remain broadly consistent because they all remain heavily conditional on incoming data.

This means that the MPC does not need to adjust the wording but can get away by insisting on the fact that the future path of exchange rates remains primarily driven by data.

Accordingly, we think that Governor Carney will mostly repeat the existing message: GDP growth to remain healthy despite the slowdown, inflation to remain sticky somewhere above the inflation target, the monetary policy stance to remain accommodative and bank rates set to hike sometime in the future, but just not now as the consumer slowdown and uncertainty peaks.

Despite some members already voting for a hike, we believe that August is far too early for the majority of the MPC to vote for a hike.

Even Haldane, who came out on the hawkish side recently, said he would consider voting for a hike later this year, but not immediately.

Hence, a risk scenario to our "no change" call for next week is that the MPC decided to take a step towards a hike and openly refers to this autumn as a likely moment to reassess its monetary policy stance.”