Welcome to our rolling coverage of today’s BoE Monetary Policy Meeting (12.00 GMT). Previews, live coverage and reaction below…
11.00 Some Bank Views Ahead Of The Meeting
Morgan Stanley – “Focus on today’s BOE meeting, where our economists expect an unchanged 9-0 vote and a cautions tone. Data have been weak overall, with signs of decelerating growth in 1Q increasing uncertainty among firms around Brexit risks, but the latest inflation print should have provided some relief. A rate cut vote, or language suggesting some MPC members no longer think the next rate change is likely to be a hike, should put further pressure on GBP”
10.20 (GMT) Meeting Preview
Market expectations were heavily Dovish ahead of the March BOE meeting and whilst the BOE statement was broadly Dovish, with the bank acknowledging the obvious downside risks, Sterling was actually seen trading higher in the wake of comments made by BOE Governor Mark Carney who stated that he still foresaw a rate-increase as more likely than not with a rate-increase needed to boost inflation back to target level.
In terms of downside risks, alongside the now usual nod to the slow-down in emerging markets and ensuing market volatility, the BOE also acknowledged the damage contributed by Brexit-driven investor uncertainty which was likely to hamper economic growth and investment and was also a likely cause cause of the recent declines in Sterling.
Regarding inflation, the bank noted their view that inflation was expected to remain low over the remainder of 2016, expected to average just 0.8%, and the bank would remain “watchful” for evidence that low inflation is having a more persistent effect.
Data & Developments
Whilst the March BOE failed to provide a clear catalyst for further downside, Sterling has generally been weaker, weighed upon heavily by Brexit-driven investor uncertainty and a raft of weak domestic economic data.
On the data front, we have generally seen weakness from the UK economy, headlined by the severe slowdown in the UK manufacturing sector, alongside a few positives, notably the unexpected pickup in March inflation and 4Q 2015 GDP
- February Retail Sales were stronger than expected
- 2015 4Q GDP better than expected
- March Construction & Services PMI’s both better than expected
- March CPI was better than expected with Core inflation jumping the most since October 2014,
- February CPI printed below expectations on headline and core
- February Public Sector Net Borrowing increased
- March manufacturing PMI below expectations (though slightly up from Feb)
- March Manufacturing Production fell the most since August 2013 and Industrial Production the most since February 2013
- Total Trade Balance deficit widened in February
Expectations For This Meeting
With Brexit uncertainty continuing to put pressure on the UK economy, and key data points still failing to show positive signs, it’s likely that the message the BOE delivers tomorrow will be pretty similar to the last one. The one key difference this time around is the sharp pickup in Core inflation over March which could see a dialling back of the Dovish language as the BOE once again looks ahead to a time when a rate increase will be warranted. Also important to keep an eye out for any further language relating to the Brexit debacle following on from the bank’s message last time around. Ultimately, with the release of the Quarterly inflation report next month , not expecting to receive much new information tomorrow but certainly will be keeping a close eye on language relating to inflation to see how the BOE uses this latest data.
10.00 (GMT) Welcome to our day’s rolling coverage
Hello and welcome to our live coverage of today’s BoE Meeting, with Littlefish FX Analyst James Harte. Here are the key details for the day:
- Bank of England Rate Decision April
- Thursday April 14th, 12.00GMT
- Current rate 0.5%, expected unchanged
- Current voting 9-0, expected unchanged