BoE: Still to early to pencil in cuts – ING

Analysts at ING consider that the Bank of England (BoE) will keep its monetary policy unchanged in the near term, but they warn a rate cut can not be completely ruled out. 

Key Quotes: 

“Analysts are heavily divided on the outlook for the Bank of England this year. Talk of a rate cut is building, particularly after some mildly dovish-sounding comments from Governor Mark Carney last week.”

“Two members of the committee voted to cut rates back in December, and recent comments from MPC voter Silvana  Tenreyro suggest that number could rise. All of this comes amid signs that the jobs market is deteriorating. Vacancy levels and job-to-job flows have fallen, while through the autumn the PMIs were pointing to non-replacement of staff.”

“But it’s still early days, and the limited evidence available suggests sentiment has improved since December’s election. The latest Markit/REC employment also points to the first rise in permanent staff appointments in a year.”

“Of course, the Brexit saga is far from over, and there are plenty of question marks surrounding the UK government’s ambition to agree to a free-trade deal this year. That suggests a rate cut can’t be completely ruled out. But for the time being, we think the Bank will hold off on easing, barring a more significant deterioration in the state of the jobs market.”