BoE: MPC expected to leave policy unchanged - Westpac

BoE’s MPC is expected to leave policy unchanged with a 7-2 vote despite CPI’s core and headline rise, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Real income is well below 2007 levels due to soft wage growth and high inflation. Although BoE and markets expect an imminent peak in inflation, its pullback from 3% may be relatively limited, with forecasts through 2018 around 2.5-2.7%. This squeeze on household finances is likely to reduce consumption and keep BoE on hold.”

“Delaying 4th round Brexit negotiations highlights their fractious nature so far, as well as the vulnerability of UK’s domestic politics as party conferences get into full swing. May desperately needs to bolster herself (speech on 21st ?) and her Tory Cabinet, despite the passing of The Great Repeal Bill’s first reading.”

“Recent GBP gains on the back of softer Brexit prospects and potential MPC guidance are now more likely to buckle under the weight of uncertainty over Brexit and domestic politics.”