Analysts at TD Securities suggest that their expectation for a relatively quiet BoE’s MPC should translate into a similarly-tame GBP reaction.

Key Quotes

“Turning to next week's decision, we expect the minutes to largely reflect the tone from May. We see the MPC repeating key lines that rates will need to rise "at a gradual pace, and to a limited extent". A dissent for a hike is not our base case (ie, we expect a unanimous 9-0 decision), but one is well possible. While we don't think that either Haldane or Saunders actually wants a rate hike in June, they might choose to vote for one anyway to send a signal.”

“Saunders would be the more likely between the two to vote for a hike, in our view. Ultimately, the most interesting material on Thursday could well be the Minutes rather than the policy summary, with the updated view of H1 growth and assessment of Brexit risks given the ongoing leadership race.”

“Market reaction to the decision is likely to be driven by the FOMC decision the night before: the relative policy stance is important. But a 9-0 on-consensus decision, absent a major Fed policy shift, should yield little reaction in rates and fairly muted reaction in sterling.”


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