Analysts at Deutsche Bank point out that the consensus expectation is that the BoE will deliver a 25bp hike on Thursday, something that the market is currently assigning a 85% chance of happening.
Key Quotes
“Should they hike, which our economists expect the BoE to do albeit dovishly, then this would mark the first time since 2009 that the bank rate would be above 0.5%. It’s worth noting that the latest BoE economic projections will also be released alongside the policy decision, including new forecasts for growth and inflation.”
“It’s also expected that BoE Governor Carney will offer an updated view on the neutral rate.”
“UK’s current neutral rate is between 0.25% to 0.50% with the risk being that the BoE’s estimate is at the higher end of this range. This would translate into a nominal rate of between 1.75% to 2.50%.”
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