BoE: No change in policy today – Deutsche Bank

Ahead of today’s BOE meeting, economists at Deutsche Bank note that the focus will be squarely on the minutes and in particular the tone and language used to assess last week's mostly dismal data.

Key Quotes

“In particular, the drop in wage growth (mom) for the first time in over a year and the sharp fall in industrial production should be a topic of discussion. On the one hand, poor output data to kick off Q2 could raise some concerns for the MPC regarding the strength of UK economy.”

“On the other, stronger retail sales data may keep hawks optimistic of a bounce back in Q2. They go on to say that while it is still early days, the BoE could strike a less hawkish tone though the team expect them to largely look past this in anticipation of May data (the last data they will see before the August MPC meeting).”

“In summary our economists expect no change in policy today but still think August is ‘live’ for an opportunistic rate hike (currently priced at a little over 25% probability for a hike).”

“It’s worth adding that later in the evening we’ll also have Governor Carney’s annual Mansion House speech, which in the past have been important market moving events for UK assets. But like the MPC meeting, they expect Carney to also sound fairly cautious but retain the MPC’s tightening bias.”