Thursday, March 18th: Policy Decision & Minutes release: 12:00 GMT

Current Policy: Bank Rate: 0.10%; Asset Purchase Program: £875bn; Corp Bond Purchases: up to £20bn

In Brief:

• Analysts expect a unanimous vote to leave the Bank Rate unchanged at 0.10%

• Analysts expect no change in QE program envelope

• Most expect no change expected in QE purchase pace but there is uncertainty here

o A couple forecast or see risks that QE pace will be reduced

o Others see more risk of an increase in purchase pace

• Neg rates are a viable option but no expectations BoE will hint at potential use in the near term

• Market is pricing unch rates until the end-2021 and slight chances for hikes by mid-2022

• The policy decision and minutes released will be at 12pm GMT

 

Street Views:

-Barclays: Expect no change at this meeting but will watch closely any comments on the recent economic data

and changes to the outlook since the Feb meeting. Expect MPC to highlight positive developments on

vaccinations and the in COVID cases. With the more expansive budgetthan originally projected, MPC is unlikely

to push strongly against the recent rise in yields.

-BoA: In contrast with the ECB last week, the MPC may be preparing to reduce the rate of QE purchases &

there is even a possibility it will get announced this meeting. Nevertheless, the meeting is unlikely to be a

major market mover; MPC likely to highlight the fiscal loosening of the recent budget but the recent sell off in

yields represents a significant tightening of financial conditions since Feb.

-Citi: Expect no change at this meeting. Despite positive developments since Feb, expect the MPC to be

cautiously optimistic but highlight that there is still substantial uncertainty. Citi no longer expects a rate cut

but still see a further increase in QE envelope of £50bn by the end-2021. Expect the MPC to highlight twoway risks.

-GS: Expect unch policy but hints at future changes in forward guidance and sequencing of exit to lean against

the bond mkt sell-off. Surprised by the lack of pushback against the repricing in the mkt from MPC

commentary.

-Investec: Believe the uncertainty in economic outlook will prevent MPC from considering withdrawing

stimulus for now. Anticipate unch policy this meeting

-NWM: Expect a potentially conditional reduction in QE purchase rate from £18bn p/m to £15bn p/m to

stretch purchases until the end-2021. A pace reduction would probably imply no extension to the QE envelope

is forthcoming but, given large fiscal deficits, expect an increase of £50bn QE in Q1 2022.

-RBC: Expects no change in policy and unch rate of purchases but pace will be reduced sometime in the future

to stretch the purchases until the end of the year.

-Scotia: unlikely to be a policy change at this meeting although some risk of expedited QE purchases. With the

March budget that included some near-term fiscal stimulus plus the significant progress on vaccination for

COVID 19, the MPC is unlikely to react to a back-up in yields.

 

James Fay Founding Partner T +44(0)20 7422 2978 M +44 (0)7500 988 788 E james.fay@archr.com 49 Carnaby Street, London, W1F 9PY United Kingdom ARCHR.COM

 

 

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