Barclays on the Bank of England decision

  • The MPC is leaning more to the dovish side after some MPC members surprised with hawkish statements previously
  • The new BOE view is "much more in line" with the data
  • The new BOE tone reduces the risk of an early rate hike
  • The downgrade in growth forecast to 1.7% from 1.9% likely reflects more caution, especially on investment
  • The rhetoric about future rate hike was largely unchanged


  • The BOE is still very optimistic on wage growth despite the lower forecasts
  • See 3% wage growth forecast as too high, think it will stay at or below 2%
  • The BOE expects low interest rates and high profits to lift investment, even as firms compete with Brexit uncertainties... that's a big question.
  • ING believes companies will be more cautious
  • "We think the MPC as a whole will continue to look through the latest price spikes and focus more heavily on the weaker growth outlook."
  • They don't think the BOE will follow through with hikes, more more likely it's a "one or two and done"

Scotiabank economist Alan Clark

  • "The most striking thing is that they have downgraded the outlook for wages despite lower-than-expected unemployment, and the inflation profile is a bit lower, despite a weaker pound."