BoE Preview: Forecasts From Three Major Banks

The Bank of England announces its latest decision at 11:00 GMT on Thursday, June 24

here are the expectations forecast of three major banks.

Wells Fargo

“We expect policymakers to provide an update on how the economy is evolving and if the renewed spread of COVID-19 is disrupting economic activity. In addition, we expect BoE officials to provide an updated view on inflation and whether price growth is transitory or more engrained. But given the pace of the recovery, we do believe the BoE will signal a further slowdown in asset purchases is likely over the next few months. In our view, the next taper will likely occur toward the end of the summer at the BoE meeting in August.”

Rabobank

“We don’t expect any changes to the Bank’s policy settings. The economy experiences a post-lockdown sugar rush, but in our view there’s only so much latent demand that can be unleashed. The surge of the delta variant adds a new layer of uncertainty to the economic recovery. We expect CPI inflation to peak at 2.5% YoY in early-2022, before slowing down. Even though there is a risk of structurally higher inflation, the MPC will see the current rise as transitory. The MPC has already planned out most of its glide path towards the end of its net asset purchases, successfully selling this to the market as a technical taper.”

TDS

“In the wake of a more hawkish than expected FOMC, markets are now questioning which central bank may be the next to shift, and many eyes are now on the BoE. However, we think that hawkish expectations are probably overdone, as the BoE still has more GDP ground to make up than any other G10 economy, and is already tapering first. Another hawkish shift would be overkill.”

TDS

“In the wake of a more hawkish than expected FOMC, markets are now questioning which central bank may be the next to shift, and many eyes are now on the BoE. However, we think that hawkish expectations are probably overdone, as the BoE still has more GDP ground to make up than any other G10 economy, and is already tapering first. Another hawkish shift would be overkill.”