BoE: hiking threshold conditionally met for Feb-19
- The BoE MPC was unanimous in voting for no policy changes in November, as widely expected, after hiking Bank rate to 0.75% in August. Amid acute uncertainty about the Brexit deal and responses to that, the BoE is temporarily treading water.- Surprisingly resilient inflation forecasts have slightly raised the hawkish tensions despite assuming tighter monetary conditions. The 60% probability of exceeding the target in 2yrs is consistent with BoE forecasts ahead of previous rate hikes.
- A Feb-19 hike requires a deal before Christmas and for Sterling not to deliver all the tightening. I maintain my view on the compromise, timeline and GBP reaction.
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