Bank of England: another rate cut is a close call - Danske

Analysts from Danske Bank, still expect a rate cut from the Bank of England but they see it as a close call depending on the incoming economic data.

Key Quotes:

“The BoE left the door open for more easing later this year if data meet expectations of the August projections. However, the BoE signals that the probability has declined, as near-term indicators have been better than expected.”

“As this was one of the ‘small’ meetings without updated economic projections and a press conference, the focus was on the minutes. As expected, the minutes showed that the BoE is still on an easing bias although it recognises that ‘near-term economic activity has been somewhat stronger than expected’.

“The BoE now expects Q3 GDP growth of 0.2-0.3% q/q compared to 0.0-0.1% q/q previously. Most importantly the minutes repeated that ‘a majority of members expected to support a further cut in Bank Rate’ if the updated projections in November are broadly consistent with the August projections. Overall, the BoE left the door open for more easing later this year but is signalling that the probability has declined.”

“We maintain our view that the BoE will cut the Bank Rate by 15bp from 0.25% to 0.10% in November, but it is a close call and will largely depend on economic data in the coming months.”