A preview of the Bank of England meeting today from BoA/Merrill Lynch
At its meeting on Thursday, the Bank of England (BoE) will need to acknowledge global events and data that justify a more dovish tone, says Bank of America Merrill Lynch.
"But we do not expect the BoE to "row back" expectations to where the rate strip currently sits. Expect expressions of concern and uncertainty to be tempered with references to the modest likely impact of China developments on the UK economy and to a moderation in currency-induced disinflationary pressure (thanks to sterling slippage)," BofA projects.
"However, there might be a circular aspect to any sterling reference being used as a reason for the BoE not to concur with market pricing on rates. We suspect that dovishness is priced and a "not dovish enough" set of minutes is probably the greater risk, which would offer sterling support," BofA argues.
