BoE Review: Preparing for an August hike – Nordea Markets

Sandeep Kanihama FXStreet Contributor

Bank of England (BoE) left its policy rate and bond programme unchanged, but market perceived the decision as hawkish as chief economist Haldane joined the hawks by voting for a hike, according to Andreas Wallström, Chief analyst at Nordea Markets.

Key Quotes

“The MPC was split in its decision with Haldane, McCafferty and Saunders advocated to increase the bank rate by 25 bps. Chief economist Andrew Haldane is new in the hawkish camp.”

“The decision was seen as hawkish by markets with stronger sterling and higher rates. Market pricing implies close to 50% chance of a 25bps rate hike in August and a full hike is priced in at the end of 2018.”

“There were no new inflation report released but the minutes stated that “inflation is expected to pick up by slightly more than projected in May in the near term, reflecting higher dollar oil prices and a weaker sterling exchange rate”.”

“The minutes reiterated that “any future increases in Bank Rate were likely to be at a gradual pace and to a limited extent.”

“Today´s decision strengthened the case for a rate hike in August. For now, however, we stick to our forecast that the Bank of England leaves its policy rate unchanged throughout 2018 and 2019.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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