HALISTER1: BOE Rate Vote Could Be Split 7-2 at Next Week’s Meeting: BofAML

BOE Rate Vote Could Be Split 7-2 at Next Week’s Meeting: BofAML

(Bloomberg) -- Look for BOE’s Gertjan Vlieghe to vote for a rate cut at next week’s policy meeting; see a possibility that he is joined by Andy Haldane, BofAML analysts Robert Wood, Gilles Moec write in client note.
  • They may see a cut as a sensible insurance policy
  • After this week’s PMIs, BofAML’s GDP tracker points to 0.2% q/q growth in 2Q vs BOE’s forecast of 0.5%
    • May see a rebound in the data if uncertainty drops; a key question for the BOE will be whether GBP could rise if U.K. votes to stay in the EU at the June 23 referendum
    • If sterling stays at current levels, inflation would pick up much more than the BOE is forecasting
  • The Bank needs to be clear about the extent to which the vote is weighing on the economy, and therefore how much of a rebound it expects if the country votes to stay in the Union
  • NOTE: The BOE will simultaneously publish its rate decision, minutes and quarterly Inflation Report at noon London time on May 12
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Gertjan Vlieghe (Bank of England)
Gilles Moec (Merrill Lynch International)
Robert Wood (Merrill Lynch International)

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