It’s another BoE Super Thursday today with rate decision as well as quarterly inflation report. BoE is widely expected to keep Bank rate unchanged at 0.75%. The asset purchase target will also be held at GBP 435B. The decisions are very likely to be unanimous.
BoE might revise down both GDP and inflation forecasts. But it should be emphasized that such forecasts are based on scenario of a smooth Brexit. Hence, reactions to any revision to the forecasts could be temporary as the biggest question of Brexit won’t be answered by these figures.
And, as BoE noted repeatedly, “The broader economic outlook will continue to depend significantly on the nature of EU withdrawal, in particular: the form of new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond.”
Also, “The appropriate path of monetary policy will depend on the balance of the effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.”
We’d expect BoE to reiterate such messages in today’s statement.
Here are some previews:
