Bank of England: No surprises, recognizes Q3 growth may be higher - Danske Bank
|Analysts at Danske Bank, point out that the Bank of England did not make any big policy signal after today’s announcements. They see the next rate hike in May 2019.
Key Quotes:
“As expected, the Bank of England (BoE) voted unanimously to keep the Bank Rate at 0.75%. As it was one of the small meetings without an updated Inflation Report or press conference and following last month’s hike, this did not come as a surprise”.
“The BoE did not make any big policy signal shifts either, although it recognises Q3 growth may be higher than previously anticipated after the stronger-than-expected GDP growth print in July.”
“We still expect the BoE to hike around once a year and our base case is that the next hike will arrive in May 2019; therefore, after the UK formally leaves the EU. It may be earlier if the economy continues to surprise on the upside. On the other hand, the central bank also stated that Brexit uncertainty has gone up among businesses and in particular investors since the August meeting. The rate decision also depends on the outcome of the Brexit negotiations, as we are approaching the ‘end game’ in Q4.”
“It was announced earlier this week that BoE Governor Mark Carney has extended his term to January 2020 ‘to support a smooth exit of the United Kingdom from the European Union’. This should not have any policy implications in the short run.”
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