Wednesday, 03 February, 2016
BOE.. what the banks are thinking for tmrw
-BAML: several reasons incl wages, oil, downside growth risks for BoE to wait before hiking rates; Inflation Report may give a more dovish assessment of rate outlook than Nov; BoE speeches have not been as dovish as mkt expectations, hard to see MPC endorsing such a flat curve; expect inflation f/c a 2y and 3y horizon unch from Nov
-DB: high-bar for Carney to ‘out-dove’ the mkt; acknowledgement of the offsetting impact of weaker sterling on inflation trajectory could be seen as hawkish relative to mkt pricing
-GS: expect 8-1 on rates; expect 2y & 3y IR horizon to be slightly higher than in Nov with MPC saying it wishes to avoid overshooting tgt; likely will be moderated by comments on downside risks
-JPM: expect 8-1 on rates; expect near-term inflation f/c to be lower than in Nov but 3y horizon will remain above 2% which may be taken as slightly hawkish; press conf tone will rule out near-term increase in rates
-Nomura: expect 8-1 on rates; BoE unlikely to signal a move until MPC is sure inflation pressures are coming; any large overshoot in f/c at 3y point will be downplayed
-RBS: expect a unanimous vote on rates; 2y and 3y forecast to be little changed; updated policy signal are unlikely to impact mkts much given expectations have receded so much
-UBS: f/c will imply mkt is not pricing in enough tightening but will not be ‘loud enough’ to signal near-term move given broader mkt moves, softer GDP and wages; MPC unlikely to push against mkt rate expectations ahead of EU referendum
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Alan "Ginger" Taylor
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