BOE leaves bank rate unchanged at 0.75%; votes 0-0-9

Author: Justin Low | Category: Central Banks

BOE announces its latest monetary policy decision - 2 May 2019


  • Prior 0.75%
  • Official bank rate votes vs 0-0-9 expected
  • Asset purchase target £435 billion
  • Corporate bond target £10 billion
ForexLive
Here's the details of the statement and the inflation report:

  • Q1 GDP likely boosted by stockpiling
  • Says that underlying growth is 'slightly stronger' than expected in February
  • Signals that more than one rate hike is needed to keep inflation in-check
  • Sees inflation increasingly above target at the end of forecast horizon
  • Economy should also be running above capacity at the time
  • Energy price cap to push inflation above target in April
  • GBP strength, energy base effects to push CPI below target around 1-year horizon
  • Economic outlook will depend significantly on Brexit
  • BOE forecasts continue to assume smooth transition
  • Sees 2019 GDP of +1.5% (previously +1.2%)
  • Sees 2020 GDP of +1.6% (previously +1.5%)
  • Sees 2021 GDP of +2.1% (previously +1.9%)
  • Inflation seen at 1.72% in one year's time (previously 2.35%)
  • Inflation seen at 2.05% in two years' time (previously 2.07%)
  • Inflation seen at 2.16% in three years' time (previously 2.11%)

At first glance, the upward revisions to growth forecasts and economic projections in general are positive for the pound but the negative developments to inflation and the fact that the BOE continues to allude to Brexit as the reason for it to continue its wait-and-see mode means that a rate hike isn't going to happen any time soon.

As mentioned earlier, regardless of the bump in the forecasts, the BOE still has its hands tied and that is very much the message here as well. The pound got a quick bump higher with cable rising to 1.3075 before fading and falling to a session low of 1.3026.

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