BoE: Policy on hold – TDS

Analysts at TD Securities point out that the Bank of England left its policy on hold today, with Bank Rate unchanged at 0.75% and it reiterated that eventual hikes would be “at a gradual pace and to a limited extent”.

Key Quotes

“The tone of the accompanying Minutes flagged upside and downside developments, but had broadly neutral policy implications. The committee acknowledged that some incoming data was better than expected, leading to an upward revision of their 19Q1 nowcast to 0.3% q/q. But they also noted that despite recently strong official employment figures, some survey data was suggesting a significant moderation in employment data ahead (see chart). Underlying inflation pressures were judged to have been developing in line with their February forecasts.”

“The MPC continued to fret about Brexit developments, noting that ongoing uncertainty was weighing further on firms’ spending plans. They reiterated that the monetary policy response to Brexit could be in either direction, though we note that recent MPC rhetoric has suggested that a No-Deal Brexit would lead to policy easing, not tightening.”

“With Brexit developments in flux, should uncertainty continue well into 2019Q2, we will be minded to nudge our next expected BoE hike (currently August) to November or later.”