Bank of England to cut rates in January irrespective of what comes out of January's PMI report - TD Securities
|Bank of England (BOE) will cut rates by 25 basis points this month no matter what comes out of January's PMI report, scheduled for release on Friday, according to TD Securities analysts.
Key quote
While some analysts are looking at today's PMIs as the make-or-break factor for the Bank of England decision next week, we believe instead that the hard data has been disappointing enough to justify a rate cut.
At the end of the day, we look for more analysts to shift their stance to calling for a rate cut next week.
Analysts think the poor retail sales report for December released earlier this month was the final nail in the coffin for the BOE. December retail sales contracted by -0.6% month-on-month. That was well below the consensus estimate of +0.6% and came on the back of a downwardly revised -0.8% drop in November.
The Markit Manufacturing PMI for January is seen rising to 48.9 from the prior month's 47.5. Meanwhile, Services PMI is forecasted to tick higher to 51.00 from 50.00. Both data are scheduled for release on Friday at 09:30 GMT.
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