BoE: Still on course for another rate cut – RBS

Research Team at RBS, notes that there was no changes in the BoE’s monetary policy settings in September, as expected (Bank Rate: 0.25%, Asset purchase target: £435bn).

Key Quotes

“Unanimous policy votes on both Bank Rate and QE, again as expected (though there was some risk of one or two dissenting dovish votes on Bank Rate). The overall tone of the Minutes in September was very similar to August. Most importantly, the MPC reiterated that a majority of members expected to lower Bank Rate if the economic outlook was judged to remain ‘broadly consistent’ with the August Inflation Report. This final cut would then be delivered in either November or December 2016.

Our forecast is for a final 15bp cut in Bank Rate to 0.1% on November 3 2016. We expect the QE gilt asset purchase target to be raised by £60bn to £495bn in February 2017 and by a further £30bn to £525bn in August 2017.”