BoE MPC Decision: Little changed from May – Lloyds Bank

Nikesh Sawjani, Research Analyst at Lloyds Bank expects the BoE’s MPC to keep policy unchanged at its June meeting, with Kristin Forbes likely to maintain her hawkish dissent at her final meeting, producing a 7-1 voting record on Bank Rate as Charlotte Hogg’s departure continues to leave a temporary vacancy on the MPC.

Key Quotes

“Following the completion of APF purchases of government and corporate bonds, we do not anticipate the early termination of the Term Funding Scheme; an assessment of its continuation beyond February 2018 is due at the August 2017 Inflation Report.”

“With the incremental data since the May Inflation Report so far not diverging materially from forecasts, the MPC has little to react to.”

“We expect the MPC to prove reluctant to change course on policy, even though inflation is forecast to rise further above target. But signs of consumer weakness will be needed to corroborate the eventual restraint on inflation once the impact of sterling weakness abates.”