BOE’s June meeting to be relatively uneventful – Goldman Sachs

Goldman Sachs’ analysts offer a sneak peek on what to expect from today’s BOE’s policy decision, which will be announced at 1100GMT.

Key Quotes:

“The MPC's June meeting comes just one week after the 2017 general election. As such, we expect it to be relatively uneventful.

We again expect a 7-1 vote for unchanged Bank Rate (with external MPC Member Forbes again voting for a 25bp rate rise, in her final meeting before leaving the Committee).

We again expect a unanimous vote for no change in asset purchases.

In May, the MPC expressed some scepticism about the lack of prospective monetary policy tightening embedded in the "very gently rising path" of market forwards at the time. The forward curve has flattened yet further since then.

However, we do not expect the MPC to restate its scepticism of market pricing in the Minutes to its June decision. Tactically, we think the MPC will instead reserve judgement until it is able to offer an updated set of growth and inflation forecasts in its August Inflation Report. 

Over the next 12 months, we expect monetary policy to remain unchanged. Last week, we brought forward our central forecast for the first hike in Bank Rate from 2019Q2 to 2018Q4. That said, our conviction about the precise timing of policy tightening is low given the considerable risks looming over Brexit negotiations.”