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Analysts at Nomura believe that the Bank of England (BOE) is unlikely to adopt negative interest rates at its policy meeting this Thursday. Although the bank may expand its QE programme by £100bn.

Key quotes

“An extension of the Bank of England’s QE programme by £100bn.

We see such an expansion as representing a good balance between too little (£50bn) and too much (200bn)

While negative rates are being considered for inclusion in the Bank’s toolkit, they are unlikely to be available for use until early next year – and even then we don’t expect this policy tool to be deployed. 

We expect the Bank to repeat its ECB-style guidance that the MPC does not intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably. 

Its forecasts are likely to remain conditioned on an immediate, orderly move to a comprehensive free trade agreement with the European Union on 1 January 2021.”

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