Bank of England Preview: Eight major banks expectations

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The Bank of England (BoE) is set to announce its Interest Rate Decision and the Asset Purchase Facility on 17 September at 11:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of eight major banks, regarding the upcoming BoE meeting. The central bank is widely expected to leave its policy unchanged while investors will watch the BoE’s guidance amid a stop-start economy. GBP/USD is snapping a three-day winning streak despite the latest bounce off 1.2901 ahead of the meeting.

TDS

“This month’s Bank of England decision isn’t expected to be any kind of turning point, with no new forecasts at this meeting and no need to address the QE programme as it still has room to run. However, we do look for a slightly dovish turn, with more focus on the downside risks to growth going forward.”

Rabobank

“We expect the Monetary Policy Committee to keep Bank rate unchanged at 0.10% at the September meeting. As the purchases under the APF have slowed down considerably, an increase in the facility’s ceiling –currently set at GBP745 billion– is not imminent either. We believe that the balance sheet remains the Bank’s policy instrument of choice, and as the economy faces some very significant headwinds, we expect the MPC to announce a GBP100 billion increase of the APF when it meets on November 5.”

ING

“The combination of muted inflation, higher unemployment and a longer recovery all point to further stimulus. The main question next week for markets will be whether the Bank signals a more cautious outlook, but also if policymakers give any further clues on negative rates. Recent communication suggests they are in the toolbox, but that QE is seen as a more important tool for offering extra support.”

Citibank

“We do not expect policy changes at this week’s BoE meeting, but dovish signals such as a vote split and signals for more QE and a rate cut in November look likely. The meeting comes amidst the backdrop of receding the UK fiscal tide. The MPC has so far refrained from any advice to the UK Treasury but this could change. Therefore, at this week’s MPC meeting, Citi analysts also look out for MPC comments on fiscal policy, especially into 2021.”

Deutsche Bank

“The base case from our UK economist is that there won’t be a further £60 billion QE package until December, though there are risks of an earlier announcement at the November meeting. Keep an eye out in case there’s a voting split between the MPC’s 9 members as some might seek additional stimulus.”

ANZ

“We are not expecting any policy changes at this week’s BoE meeting, but the economic and policy backdrop to the UK argues for increasingly dovish guidance, particularly with Brexit uncertainty an ongoing theme.”

Wells Fargo

“We think the BoE is done cutting its policy rate, but we look for another ₤100 billion increase in asset purchases in Q4-2020.”

Credit Suisse

“It is unlikely any policy change will be announced given the GBP100 B rise in asset purchases announced in June is still in play. Our economists see another GBP100 B increase being announced in November. Laying the ground for this, we assume the BoE will need to downgrade some of its more optimistic forecasts from its August meeting, for example by raising its peak unemployment rate forecast from the current 7.5% or by extending the time needed to return to pre-COVID-19 GDP levels.”

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