UK: Expect neutral statement and modest forecast changes - TDS

Analysts at TDS are looking for a neutral statement and modest forecast changes from today's BoE decision and Inflation Report.

Key Quotes

“While we continue to look for a rate hike in May, we think that it's far too early to signal any change in tone now. In the statement and minutes we look for a 9-0 vote for rates on hold and a similar tone to Dec, with no commentary on current market yields. And in the IR we look for 2018 GDP growth and CPI to be revised slightly higher, but for the annual rethink on the supply side to result in a downward revision to potential growth and a parallel downgrade to 2019-2020 GDP forecasts. That could also see 2019-2020 CPI revised a touch lower, but likely remain above 2.0%.”

“Given the generally positive macro backdrop and diminishing slack, we think that the risks of a slightly hawkish turn are greater than the risk of a dovish surprise. It's also worth keeping an eye out for any commentary from Governor Carney on recent market volatility in the press conference, as he tends to be one of the more market-savvy and market-attuned central bankers, and may have some insight into how G10 CBs in general are thinking about the recent market moves.”