"Looking at the BoE's normal, historical reaction function, by our calculations the BoE normally would have been holding an easing bias for at least the last year. And most of this weakness was coming from the survey data, while the hard data had been holding up a bit better than the PMIs and other surveys would suggest, giving the BoE cover to keep rates on hold."
"However, the most recent source of weakness in the UK has been the hard data, which turned notably softer into the end of 2019, while we've most recently seen a rebound in the survey data. The question is whether the BoE can now credibly turn around and say that the hard data should be looked through, while the survey data must be the true reflection of economic momentum."
"For the last year we've seen weak survey data, but the hard data strong enough to keep the BoE on hold. With that pattern having flipped, and hard data weakening but surveys pointing to optimism, the BoE cannot credibly say that now the survey data is sending the correct signal. The call is very close though, near 50-50."
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