BoE: No fireworks offered – Rabobank

Rabobank analysts point out that as per expectations, the Bank of England MPC kept rates unchanged at 0.75% and the vote was unanimous.

Key Quotes

“The forward guidance was left untouched as well. The MPC still judges that a tightening of monetary policy at a gradual pace and to a limited extent would be appropriate, if the economy develops in line with the projections as set out in February.”

“These projections are based on a smooth transition towards a new trading relationship with the European Union. Given the huge uncertainties surrounding both the nature and the timing of Brexit, these need to be updated once clarity emerges.”

“Significant parts of the minutes were devoted to Brexit and its effects on business investment.”

“The implied probability of a rate hike before the end of the year has dropped even further, but this is primarily related to yesterday’s FOMC decision.”

“The market is rightly questioning whether the BoE dares to go against the Fed. We expect the MPC to sit tight for a while and forecast no rate hikes for the remainder of this year.”