BoE most likely will stand pat - BBH

In view of analysts at BBH, the Bank of England also most likely will stand pat in this week’s meeting but the vote may attract interest.  

Key Quotes

“One of the three dissenters at the last meeting (Forbes) term end and her replacement (Tenreyro) is widely expected to vote with the majority.  However, there is some risk that Haldane votes with the hawks, which would leave the vote 5-3.  Paradoxically, if Haldane does not vote for a hike, the quid pro quo may be a more hawkish quarterly inflation report, that is released at the same time as the MPC meeting concludes and the minutes are released.”  

“Ahead of the BOE meeting, the July UK PMIs for construction, manufacturing, and service will be reported.  Forward looking new orders and business expectations have softened, this batch of PMIs will likely suggest that the UK economy is gradually slowing, and the Bank of England is must recognize this in word and in their forecasts.  After a slow H1 (Q1 02% and Q2 0.3% vs. 0.2% and 0.6% in Q1 16 and Q4 16), the economy is not expected to accelerate in H2.”

“We suspect that the peak in UK inflation is within a month or two.  The base effect of sterling's sharp drop is eliminated from the year-over-year comparison, the pullback in energy prices, and softer consumption as the squeeze on real wages bite.  The contest is between these forces and the patience of a majority of the MPC.”