BoE: rate cut resisted as reaction function flexes
- The MPC split 7-2 again in favour of keeping Bank rate at 0.75%, which surprised some expectations for a rate cut but was consistent with my forecast.- A dovish near term policy bias remains, which could crystalise in a cut if the data rebound fails to sustain. I still see the economy as healthier than widely appreciated, and the realisation of that should ultimately flip the policy bias.
- The forecast excesses accumulating support my call for the next move to be a rate hike. However, those excesses build less, so the MPC is no longer signalling multiple hikes. I postpone my rate call to one hike per year from May-21.
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