BoE: Monetary policy to stay in neutral mode – RBC CM

Analysts at RBC Capital Markets suggests that the BoE’s monetary policy is in neutral mode as that was the message from the February Inflation Report, and thus far, subsequent developments haven’t given them cause to alter that view.

Key Quotes

“Indeed, this stance could prevail well into 2017 despite inflation picking up sharply. The headwinds for the consumer appear to be emerging as anticipated with wage growth moderating last month and the cost of living on the rise with CPI inflation now at 1.8% y/y. For the time being though many other indicators still point towards reasonable growth at the start of 2017 so expect a ‘wait-and-see’ type message from the minutes even though slightly softer PMIs in the latest round will have to be acknowledged. This will be the first meeting for new Deputy Governor Charlotte Hogg. We expect a 9-0 vote for policy to be unchanged at this meeting.”