Thursday, 24 June, 2021
BOE Street Views
BOE Street Views
Barclays: Expects BoE to stay the course even while they acknowledge the better outcome relative to May forecasts. Expect unanimous vote on leaving rates unchanged and only Haldane again voting to reduce Gilt QE by £50bn. BoE to continue pushing the idea that economic slack has to be significantly reduced before policy can be tightened. The pandemic situation could lead to a note of uncertainty.
BoA: Expects policy left unch at this meeting. Longer term view sees a hike of 15bp in May 2022 and begin Quantitative Tightening beyond that point. See BoE as tying mon policy to internal forecasts. Since BoE are not aiming to overshoot inflation (unlike Fed), they will tend to be more reactive to economic data
Citi: Expects policy left unch at this meeting and wait until the end of furlough to determine its next move. After furlough ends in Sept, believe the BoE will see slack and thereby delay rate lift-off. Nevertheless expect the MPC to re-iterate they will still stay vigilant and ready to act to avoid any accusation of complacency.
GS: Expects policy left unch at this meeting even as inflation has surprised higher. Feel the MPC will reiterate inflation is transitory and it is unlikely the bank will say anything that could pull forward any rate hike for 2022.
ING: Expects the Bank to say little new about when it might hike, given the MPC wants to see clear progress on reducing economic slack first. Although data have been good lately, much of this was expected, while pandemic-related developments are less positive. See the first rate hike at the beginning of 2023.
Investec: Expects little change to policy at this meeting. Once again Haldane could vote for a reduction in the QE envelope but as it’s his last meeting, the impact will be minimal. Watching the minutes to see if the MPC sees upside risk in either GDP or inflation. Expect a shrinking of the balance sheet in 2022 with the first rate hike in 2023.
JPM: Expects policy left unch at this meeting. Expects BoE to remain optimistic on the economic outlook and emphasize that inflation outlook is now more balanced. Once again Haldane to vote for a reduction in the QE envelope by £50bn to end QE purchases by the end of August. MPC will reiterate that although the inflation is higher than originally projected, this is transitory altho they will acknowledge that the risk bias is shifting
Lloyds: Expects policy left unch at this meeting but the BoE to potentially acknowledge stronger than expected growth and inflation. Tone of the meeting may not be as hawkish as some expect due to the delay in re-opening of the economy on the back of the Delta variant of COVID.
Nomura: Expects policy left unch at this meeting. Hope the MPC will provide more insights on the upward surprises in CPI and persistence of inflation, fast house price growth and future changes to policy.
NWM: See a low probability of any change to mon policy at this meeting although the market will focus on any possible hawkish tilt. MPC will reiterate their view that inflation is ‘transitory’ and any change in guidance will be delayed until the August MPR. QE vote expected at 8-1 again with Haldane again looking to reduce the total QE by £50bn. No longer expect QE to be extended by £50bn in Q1 ‘22. See first hike in Q3 2023
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