BoE thoughts from Barclays, saying the Bank of England is constrained by political risk.

Which is never good.

Anyway, Barclays, this in very brief:

  • market has … moved to pricing out a rate hike by the MPC in 2019
  • increased political risk is viewed as potentially constraining the MPC's ability to act if the downside risks associated with a disorderly Brexit outcome begin to crystallise
  • against this … high frequency data in the UK have been mixed at best … forward-looking components looking distinctly weak, although this is as much a global story as a UK one
  • The MPC seems likely to be forced to continue to talk about a tightening bias while acknowledging that Brexit-related downside potential continues to rise and is likely to intensify over the remained of the year