BoE Preview: Pressure on the Bank to act will increase in the autumn – Rabobank

The Monetary Policy Committee of the Bank of England (BoE) will announce its decision on Thursday. No change in rates is expected. Analysts from Rabobank believe that the balance sheet remains BoE’s policy instrument of choice, and they expect that the pressure to act will increase in the autumn. 

Key Quotes: 

“We expect that the Bank of England’s Monetary Policy Committee will keep Bank rate unchanged at 0.10% at this week’s meeting”.

“Even though we continue to view the balance sheet as the Bank’s policy instrument of choice, the slowdown in purchases implies that a further increase in the APF’s ceiling is not imminent.”

“As the MPC wants to keep its powder dry for as long as possible, we don’t expect any bold statements or strong hints at additional easing in Thursday’s Monetary Policy summary.”

“The balance of risks is clearly towards additional monetary easing, and not towards a tightening of the Bank’s policy stance. We think that it is a matter of when rather than if the MPC announces new measures.”

“The economy of the UK faces a trifecta of risks in the remainder of the year: a second wave of the virus, a Brexit with negative economic consequences, and an increase in unemployment.”

“We call for another GBP 100bn increase of the APF, setting our sights at the November meeting.”