BoE: Expect 7-2 vote in favour of rates unchanged - TDS

In view of analysts at TDS, today’s Bank of England decision is looking a bit more interesting than it was last week, given the context of the sizeable market moves over the last few days and their base case sees a 7-2 vote in favour of rates unchanged, with largely a copy/paste statement from the August decision.

Key Quotes

“The MPC should reiterate that rates will gradually rise going forward, but will not repeat that rates might rise faster than markets are currently expecting, as that kind of statement is generally reserved for Inflation Report meetings. While last week we wouldn’t have expected a substantial market response to a copy/paste BoE, markets’ thinking now seems to be more in line with what we see as our hawkish risk scenario, where Haldane joins the dissenters for a 6-3 vote. So we see asymmetric risks with a more negligible market reaction in the case of a hawkish outcome, which seems to be largely priced in, but a much larger move lower for GBP and UK rates in the case of our dovish base case scenario.”