BoE Preview: Six major banks expectations for today's meeting

Today, the Bank of England (BoE) is set to announce its Interest Rate Decision and the Asset Purchase Facility at 11:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of six major banks, regarding the upcoming BoE meeting. The market consensus is the BoE to keep rates unchanged at 0.1% and to increase the size of the Quantitative Easing program by GBP 100 billion.

More BoE Preview: Further easing measures to boost sterling, three scenarios – TDS

Rabobank

“We expect that the Bank of England’s Monetary Policy Committee will keep Bank rate unchanged at 0.10% at next week’s meeting.  We expect that the Asset Purchase Facility will be increased by GBP 200 billion over the course of the summer. The MPC could go ‘all in’, but we believe it will opt for a more flexible approach by adding GBP 100 billion next week, and then another GBP 100 billion in August.  There has been plenty of market chatter and official talk about negative interest rates. This option is ‘under review’, but we don’t think that the MPC is ready to explore this avenue.” 

TDS

“We're in line with consensus in looking for the Bank of England to announce GBP 100 billion of further QE at the June meeting, with the risks lying toward even more QE. We do not expect any further details, nor even specific mention, of other policy options like negative rates or YCC.”

ING

“With the economic recovery still in its very early stages, we’d expect policymakers to further increase the QE target. A couple of MPC members voted for a GBP 100 billion increase at the last meeting, but according to our Rates Strategy team, this kind of expansion may only just see policymakers through to the September meeting. To avoid premature discussion about ending the policy or of tapering, we’re inclined to say the Bank will go for something in the region of a GBP 150 biliion increase next week.”

MUFG

“We expect the BoE to favour a further expansion of asset purchases with the current purchase plan of GBP 200 billion set to run out. A GBP 100 billion asset purchase expansion was discussed at their last meeting in May. It remains the most likely outcome with risks skewed in favour of a larger expansion. The GBP reaction is likely to depend more though on any update on the BoE’s latest thinking on negative rates. The GBP could stage a relief rally if the updated BoE communication does not reinforce negative rate speculation and vice versa.” 

Deutsche Bank

“The Bank of England is expected to ramp up QE by a further GBP 125 billion with more QE likely over the course of the year.” 

Danske Bank

“We expect the Bank of England to keep its bank rate at 0.1% despite ongoing discussions of negative rates. Instead of a rate cut, we expect the Bank of England to expand its QE programme by another GBP 100billion (the QE programme still remains small in scale compared to peers).”