Bank of England to remain on hold, before tightening in 2020 – Wells Fargo

On Thursday, the Bank of England (BoE) will announce its decision on monetary policy. According to analysts at Wells Fargo, the central bank will remain on hold over the next months, until a resolution to the Brexit process.  

Key Quotes:  

“The Bank of England continued to show a bias towards eventual tightening at its June meeting. This tightening is contingent on an eventual smooth exit from the European Union, however, an effort that has at times looked increasingly like a quixotic journey. Inflation data have been stronger in the U.K. than in Europe, and according to the last statement “growth in unit wage costs has remained at targetconsistent levels.”

“The U.K. economy has looked a bit more wobbly of late, particularly the manufacturing sector, which may be increasingly feeling the pressure from the factory sector struggles in continental Europe.”

“Another challenge for BoE policymakers may be the overwhelming dovish pivot of late by central bankers elsewhere around the world. For now, we expect the BoE to remain on hold and for the central bank to eventually begin tightening in 2020 once a Brexit resolution has been reached.”