BoE meeting should be a non-event - TDS

Research Team at TDS expects that today’s BoE meeting should be a non-event, with a unanimous vote to keep rates unchanged and a clear neutral stance with a repeat of the wording from the 3 Nov meeting that, “Monetary policy can respond, in either direction, to changes in the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.”

Key Quotes

“Accordingly, we look for a very muted market reaction, with little more than a hiccup in rates and FX.”

“The most substantial change to the macro and financial landscape since the November BoE meeting has probably been the latest, post-Trump move higher in global yields. This has pushed gilt yields back to pre-Brexit levels, and has seen mortgage rates start to turn higher again, which raises the risk that financial conditions end up tighter than desired into a year of political uncertainty.”

“On the other side, higher crude oil prices may leave the more hawkish MPC members a bit uncomfortable with the upside potential for headline inflation into 2017.”