BoE expected to keep rates unchanged – BTMU

Lee Hardman, Currency Analyst at BTMU, the bank of England is expected to refrain from modifying its monetary status quo at today’s meeting.

Key Quotes

“The BoE is now expected to leave its policy rate unchanged although still leave open the possibility of a further rate cut next year. It is unlikely to provide much support for the pound unless the BoE goes a step further and drops its easing bias by no longer signalling it could lower rates further. The BoE’s updated Quarterly Inflation Report should reveal an upward revision to the outlook for inflation and growth. The BoE will welcome the resilience of the UK economy in the near-term but remain cautious over the weaker medium-term outlook following the Brexit vote”.

“A larger inflation overshoot should make the BoE more cautious about easing policy further. We expect Governor Carney to reiterate in the accompanying press conference that the BoE is not indifferent to weakness in the pound. Delivering a rate cut in the near-term could prove counter-productive if it further destabilizes the pound and triggers another lurch lower increasing upside risks to inflation”.