Thursday, 06 May, 2021
BOE Street View
BOE Street View
Barclays: Expect BoE to maintain policy at this meeting. Although the MPC will acknowledge the optimistic narrative, they will attempt to balance it with saying there is historical high uncertainty. Aim is to avoid the mkt pricing in hikes in 2022. Forecasts will include revision of Q1 GDP from -4.0% to -1.5% while fiscal stimulus is larger than originally projected.
-BoA: Expect BoE to endorse mkt expectations of 2 hikes by the end-2024 plus announcement of tapering QE from £4.4bn p/w to £3.2bn. If QE tapering not announced at this meeting, it is simply delayed to June. MPR to continue forecasting inflation above 2% in 2 yrs & will also raise 2021 growth, excess demand & near-term inflation.
-Citi: Feel BoE will resist hawkish temptations & err on the side of caution. MPC will significantly revise up near- term growth but this will likely be perceived as a redistribution of growth not an overall increase. Expect 2022 inflation to be revised higher but lower in 2024. BoE to announce a tapering of QE to £3.7bn p/w but still believe a £50bn extension for the QE program will be announced in Nov.
-GS: Expects BoE to leave policy unch at this meeting. Although tapering is on the cards, this will not be announced until the August meeting. Due to stronger than expected Q1, growth will revised higher for 2021.
-Jefferies: Expect BoE to announce tapering of QE purchases at this meeting (feel this is widely expected). Expect the tone of the meeting to be optimistic as the economy reopens and pent-up demand is released.
-JPM: Expects a small hawkish shift by BoE on the back of stronger than expected growth. Expect a decrease in weekly QE purchases to £3bn now and in August this likely to be reduced further to £2bn p/w. With regards to balance sheet unwind, no decision is expected at this meeting and is more likely to come in August.
-Lloyds: Expect BoE to leave policy unch even as growth forecasts are upgraded. Developments since the Feb MPR have been positive leading to upgraded forecasts and will result in the MPC lowering their peak unemp rate. Nevertheless BoE will maintain the £4.4bn p/w purchases. A tapering announcement to be delayed until later in the year.
-Nomura: Expect BoE to leave rates & QE envelop unch. Expect the MPC to guide the mkt to a reduction in weekly purchases from £4.4bn to £2.5bn at the beginning of Sept. See an outside chance of the BoE announcing an official sequencing of tightening.
NWM: Expect BoE to announce a reduction in QE purchase rate from £18bn p/m to £14.5bn p/m & ending in mid-Dec. Expect the CPI central projection to increase by 5bp to 2.05% and 2.15% for 2y and 3y respectively. Expect a Hawkish shift for the MPC but still see rates unch until 2023.
-Scotia: See a possibility that BoE announces a reduction in weekly QE purchases but feel it is too early for the at this meeting. Nevertheless, the BoE is likely to upgrade economic growth as progress is made on COVID.
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