Halister News

(Bloomberg) -- The BOE will simultaneously publish its rate decision and minutes at noon London time.

• To follow Bloomberg’s live blog, see TLIV 57712A7F17D8003D
• NOTE: For analyst views, see the research roundup
• Key questions include:

DID THE MPC CUT RATES, BY HOW MUCH?

• The probability of a 25bp BOE rate cut today is about 78%, money-market pricing shows
• A slim majority of analysts surveyed by Bloomberg expect a cut as soon as today; 23 see rates on hold, 25 see a 25bps decrease while 2 see a 40bps cut, another 2 expect a 45bps cut, and 2 see a cut to zero
• There’s been little hard data to show how the U.K.’s decision to leave the EU has affected the economy but consensus is that it will weaken, especially if negotiations become drawn out
  • And Governor Carney warned there’s a prospect of a material slowing of the economy and his stance at the Bank of Canada was to act early to prevent a deeper downturn

HOW SPLIT WERE THE VOTES?

• Given heightened expectations of a rate cut in short- sterling markets, but mixed views about whether the case for easing is proven yet, all eyes will be on the split -- whether the bank cuts today or not
• The bank publishes new quarterly forecasts for growth and inflation next month; some policy makers may prefer to wait for that analysis before taking action
• Carney has expressed caution about rate cuts given the likely impact on bank margins and there’s a broader discussion about what easing measures central banks should prioritize in the future; this could be reflected in this week’s vote

WHAT ABOUT QE?

• The majority of economists, 40 out of 43, expect the Bank to leave its asset purchase facility unchanged at GBP375b
• It’s likely though that the U.K.’s rate-setters discussed what other easing options it has at its disposal, including a relaunch of its credit easing program
• Any discussion of the pros and cons and possible modalities will be welcome, with BofAML saying the poll of available could be as much as GBP211b if EUR-denominated bonds are included

AND WHAT ABOUT THE FLS?

• Former chancellor George Osborne told lawmakers the govt is willing to do more to support the country’s Funding for Lending scheme
• Analysts from Goldman Sachs to BofAML expect the plan to be rebooted

WHAT DOES THE BANK SAY ABOUT STERLING?

• GBP has pared losses vs dollar this week but remains ~11% below it’s YTD peak
• Ahead of the Brexit vote, the bank said roughly half of GBP’s fall since Nov. 2015 might reflect the referendum effect and earlier this month Carney said the fall can help the U.K’s economic adjustment
• Analysts expect the MPC will look through any future inflation overshoot but will be scouring the minutes for an update on the bank’s thinking