BoE Monetary Policy Committee (MPC) meeting is Thursday 2 August 2018
Previews:
✅ Preview of the Bank of England meeting (Super) Thursday 2 August 2018
✅ Are you ready for Super Thursday from the UK? BoE preview (RBC) (MS, Nomura)
✅ Early heads up preview for the Bank of England meeting (TD, Barclays, BNP Paribas)
✅ NIESR points on Thursday’s BoE meeting
✅ Odds of a BOE hike sit at 90%
And, if you read this far, more preview …
Commerzbank:
✅ Markets are now more convinced than ever that the BoE will raise interest rates by 25 bps next week to 0.75%, assigning a probability in excess of 90% to such a move. As we noted last week, the fact that the BoE has done nothing to dissuade markets of this view is telling and is a strong indication that it does not object to current market pricing. If the BoE delivers as we expect, it will mark the first time since March 2009 that interest rates have risen above 0.5%.
✅ There are good arguments for the MPC to hold fire – weaker-than-anticipated wage growth and Brexit concerns to name but two. Another way to look at the issue, however, is that current interest rate levels were designed for conditions when the economy was expected to contract by more than 3% and there were serious concerns regarding market fragility. These conditions are no longer in play which is a good argument in support of taking away some of the easing. In any case, an interest rate of 0.75% is still well below the 2% barrier which represented the pre-2009 historical low, and real interest rates would remain well in negative territory.
✅ But it is unlikely to be a unanimous decision and we expect at least one, and possibly two, MPC dissenters who would prefer to maintain rates on hold.
