BoE: data dependence for August hike
- The BoE’s forecast is broadly unchanged, which leaves another rate hike as likely to occur soon. I expect it in August, assuming the economy meets expectations.- The MPC’s revealed collective preference trades off 0.2pp of excess inflation (equal to about 3% GBP depreciation) against 0.25% of spare capacity (e.g. the UR).
- Less bullish forecasts make it a lot harder for the MPC to be disappointed in the next few months, so an August hike is less likely to be derailed as a result.
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