BoE: gloomy patience postponing policy response
- The MPC was unanimous in leaving policy unchanged again in May-19, as expected.- Reality’s robustness has raised the BoE’s growth forecasts and the accumulating excesses. The MPC acknowledges that markets are not pricing enough in, but it sees room to keep tolerating the overshoot and its perceived no-reaction function.
- A pessimistic interpretation of recent data means I expect another upside surprise to materialise over the next few months. That is too late for an Aug-19 hike, so I am pushing back my forecasts for the next rate increases to Nov-19 and Aug-20.
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