BoE: Stuck in a hold - Rabobank

Rabobank analysts are not expecting the Bank of England MPC to change its policy settings at this week’s meeting, which means that the Bank rate will remain unchanged at 0.75%.

Key Quotes

“We expect the MPC to stick to their guidance of slowly rising rates. Their confidence may even be bolstered a bit by some better-than-expected activity data, while the recent rise in oil prices is likely to have pushed the CPI forecast somewhat higher for the second half of 2019.”

“But the MPC is for now trapped in a holding pattern due to Brexit. If the uncertainties regarding Britain’s withdrawal do dissipate in the second half of the year, it may re-find the confidence to talk about rising rates.”

“But with the risk of a US recession in 2020 then already looking imminent, we believe the MPC may eventually prefer to hold off acting for longer.”