Bank of England: One or two policymakers may vote for winding up the net asset purchases early – Rabobank

The August meeting of the Monetary Policy Committee (MPC) of the Bank of England will take place this week. Market participants expect no change. Analysts at Rabobank don’t expect the MPC to offer any clues on under what conditions a first interest rate hike would come.

Key Quotes: 

“We don’t expect any changes to Bank rate. This vote is widely expected to be unanimous. We also don’t think that the MPC will spell out the conditions under which it actually would contemplate a rate hike, as the growth and inflation outlook beyond this year is too uncertain.”

“We look for an 8-1 majority vote to maintain its year-end target for gilt purchases at £875 billion. The MPC already announced a slight slowdown of these purchases in May, creating a glide path. The APF has now completed £821.6 billion worth of purchases at a current pace of £3.44 billion a week. After the conclusion of this week’s meeting, the central bank will publish a new market notice in which it sets out the details on how the APF plans to purchase gilts in the upcoming period. This concerns new net purchases and the reinvestment of the £14.3 billion of cash flows associated with the maturity of the 7 September 2021 gilt. As there are 21 weeks left before year-end, and £67.7 billion of purchases to be made, a change in pace is not imminent.”

“The central bank plans to finish its net asset purchases at the end of the year. One or two policymakers may vote for winding up the net asset purchases early. Such a decision merely creates uncertainty, while its economic impact is insignificant.”

“The MPC will now also formally add negative rates to its tool kit, even as any interest in using this policy has completely faded in recent months. The formal inclusion of negative rates also means that the MPC’s estimate of the effective lower bound needs to be updated.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD pressured toward 1.17 on Evergrande crisis

EUR/USD is extending its losses, falling toward 1.17. The safe-haven dollar is in demand as the crisis around China's Evergrande deepens and a global slowdown is feared. Tensions toward the Fed decision and also Germany's elections are taking their toll too.


GBP/USD tumbles under 1.37, succumbing to dollar strength

GBP/USD is trading under 1.37, suffering from robust dollar demand. The financial woes of China's Evergrande threaten a drop in global demand. Soaring energy prices are also weighing on sentiment. The Fed and the BOE are eyed later this week.


Gold bears tease five-week low near $1,750, China, Fed eyed

Gold bears regain controls ahead of the key weekly events, down 0.36% intraday near $1,748 heading into Monday’s European session. 

Gold News

Cardano introduces Layer 2 solution Hydra, as ADA price looks to rally 25%

Cardano price is grappling with a crucial support floor on the daily time frame as the big crypto experienced a minor crash. Investors can expect ADA to slice through this barrier before restarting its uptrend.

Read more

Canadian Federal Elections: Not a very crucial vote

Markets are taking a hands-off approach to Monday’s Canadian Federal election between Prime Minister Justin Trudeau's Liberals and Erin O'Toole's Conservatives. 

Read more