BOE to leave the policy rate unchanged at 0.75% - Rabobank

The Rabobank Research Team offers a detailed preview of what to expect from the Bank of England’s (BOE) Super Thursday, as it believes that the British central bank will stand pat on the interest rates.

Key Quotes:

“The Bank of England will of course be thinking about all these things but saying nothing when they meet today. We expect the BOE to leave the policy rate unchanged at 0.75%. This is also the consensus view and GBP OIS implies virtually no chance of a move in either direction at this week’s meeting.

Whilst the OIS market is--on balance--still looking for a rate cut in the first half of 2020, the implied probabilities have closely tracked those of a no-deal Brexit. The immediate threat of a no-deal Brexit has been averted, but uncertainty prevails.

The Christmas election, and even Johnson’s Brexit-deal, leaves open a wide range of future possible trading relationships, including no trade agreement at all. Business investment has been in the doldrums for almost two years, while cracks have also started to become visible in the labor market.

There is a good chance that sustained weakness on this front tilts the balance within the MPC. Overall, we now expect two rate cuts in 2020.”