Barclays preview of the Bank of England meeting on Thursday September 13
- The BoE will meet next week for its September meeting, six weeks after hiking its bank rate to 0.75% in August. Given little movement in data published since, we expect the MPC to maintain all monetary policy parameters unchanged (Bank rates, asset purchase targets) by unanimous votes as it reiterates its "gradual and limited" rhetoric.
- While we see little scope for market-moving revelations, there will nonetheless be some focus on whether Governor Carney's mandate extension until 2020 is confirmed and how the Bank will deal with yearend Brexit uncertainty. Indeed, its looks increasingly likely that the Bank will have to update its forecast (next Inflation Report to be published on 1 November) without confirmation of a Withdrawal Agreement.
on Brexit
- The BoE's long held position on Brexit is based on its forecasts on the average path from a limited set of orderly outcomes, suggesting that extreme and disruptive outcomes are not in the scope of its forecasts. We expect that the BoE was planning to update this view in the November inflation report, hoping for more clarity by that stage. If the November Summit assumption is verified, then the Bank's next forecast update will still be based on an average expected outcome. Accordingly, the November press conference would lose some of its interest with the focus shifting to an ad hoc post summit communiqué and the December 20th regular MPC, in order to access the likelihood of a more meaningful policy shift in 2019. The market is currently singling out the February and May 2019 MPCs by pricing 5 and 6bp increase in Bank rates (albeit not pricing a full hike before the end of the year).
