Thursday, 23 September, 2021
BOE PREVIEW:
BOE PREVIEW:
The Bank of England’s job hasn’t got any easier since it last met in August. While inflation continues to charge forward, growth has softened. There’s also considerable uncertainty about the outlook for the labor market, with the government’s furlough scheme due to end this month. All that suggests the central bank will hold off ramping up the hawkish rhetoric in September.
What to Expect:
The Monetary Policy Committee is likely to vote unanimously on Thursday to keep interest rates on hold at 0.1%. We expect an 8-1 vote split to keep the asset purchase target at 895 billion pounds. As was the case in August, Michael Saunders is likely to favor a reduction in the target stock of assets, possibly to 855 billions pounds. The decision is due at midday on Sept. 23.
The minutes of the meeting, which will be published alongside the decision, are likely to reiterate the committee expects to tighten policy modestly over its outlook horizon. With the arrival of Huw Pill as chief economist and Catherine Mann as an external MPC member, we also think it’s possible that five of the policy makers, including Pill, will see the economy as having met the committee’s minimum conditions for tightening. Still, it’s unlikely any move will come until the MPC sees the impact on the labor market from ending the furlough scheme at the end of this month.
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