BoE: More dovish but still too optimistic on growth - Danske Bank

Analysts from Danske Bank still view the core of the Monetary Policy Committee of the Bank of England, including governor Carney, as being tilted to the dovish side.

Key Quotes: 

“As expected, the Bank of England maintained the Bank Rate at 0.25% and kept the targets for the government bond purchases and corporate bond purchases at GBP435bn and GBP10bn, respectively. In line with our call (but against the view of some houses), the vote count for the Bank Rate was 6-2 against 5-3 last time, as Kristin Forbes, a known hawk voting for a hike, has left the committee and it was too early for Andy Haldane to jump camp already despite a more hawkish tone in his latest speech.”

“We still view the core of the Monetary Policy Committee (including governor Mark Carney) as being tilted to the dovish side. That said, since the unemployment rate has declined to NAIRU and inflation is above target, it may not take much for BoE to become more hawkish. Higher wage growth (and thus higher underlying inflation) is one trigger.”

“We still expect the BoE to remain on hold until the Brexit negotiations are concluded in Spring 2019. The main reasons are that we think the BoE is still too optimistic on both wage growth and GDP growth and political uncertainty remains high due to Brexit.”