BoE Preview: Major Banks are forecasting no change in policy today

Today, we have an all-important Bank of England (BOE) interest rate decision and as we head closer to the decision timings, here are the expectations as forecasted by the economists and researchers of major banks for the upcoming policy setting meeting.

With continued Brexit uncertainty and looming political uncertainty in the UK, the Bank of England is likely to again leave the Bank Rate on hold at 0.75% in its June meeting. In addition, there is some risk that the BOE’s rhetoric in the accompanying statement will become more hawkish

TD Securities

“The Bank of England meets to set policy. On paper, this should be a relatively straightforward meeting, and we expect the MPC to broadly reiterate May's (relatively hawkish) tone. That said, risks are clearly two-sided: both Saunders and Haldane have argued for hikes sooner rather than later (and might vote for a hike today), but at the same time, the global backdrop has clearly stagnated, and with political risks elevated alongside the Fed and ECB's dovish pivots, could cast a shadow on the BoE.”

“Without forecasts to back them up, though, we think a no-change message is the safe baseline until their August forecast round.”

Rabobank

“We expect the Bank of England to keep rates unchanged at 0.75% at this week’s meeting.”

“The vote is likely to be unanimous still, even as a number of influential MPC members have made some relatively hawkish speeches recently.”

“The hawks are focusing on decent wage growth amid low unemployment, but the warnings with regards to rate increases are falling on deaf ears.”

“The downside risks resulting from Brexit and trade uncertainties outweigh the upside risks of slightly elevated domestic price pressures. We forecast no rate hikes for this year and next.”

Citibank

Analysts at Citigroup argue that the Bank of England (BOE) is likely to refrain from raising interest rates in the coming months amid looming no-deal Brexit risks, which is likely to keep the GBP undermined.

“The BOE raised GDP expectations across the forecast horizon earlier. A Brexit deal (or longer extension) is a likely precondition to any hike in 2019. However, the political backdrop remains the biggest risk to GBP.”

“We no longer see a Bank Rate hike in August or indeed this year as likely, as no-deal could become a bigger risk quickly, with the dovish wind blowing through global monetary policy. This will likely be GBP-negative.” 

ING

“We expect policymakers to continue hinting that markets are underestimating the risk of further tightening. It's possible that the Bank says this more explicitly within either its statement or set of minutes (released simultaneously) this week, particularly given that market interest rate expectations have completely flattened since the May meeting.”

“There is also an outside chance that one or two policymakers vote for an immediate 25bp rate hike at this meeting - Michael Saunders, in particular, has taken a hawkish stance in public recently.”

Westpac

“We expect that the Bank Rate will again be left on hold at the June meeting. However, there is some risk that the BOE’s rhetoric in the accompanying statement will become more hawkish. The recent weakness in the GBP will boost near term inflation. There have also been hawkish comments from several MPC members despite Brexit related headwinds and related softness in real activity.”

“We remain circumspect about the strength of inflation pressures and expect an extended period of subdued GDP growth. As a result, we expect the BOE to remain on hold for the foreseeable future.”

Danske Bank

“The Bank of England meets, but in our view, the bank is firmly on hold. It is one of the small meetings without an updated inflation report or a press conference so we don't expect much change in the bank's message.”