Preview: BoE holding out for Brexit news
- The UK economic outlook remains bifurcated by EU withdrawal negotiations. Until the BoE knows the outcome and reactions to it, any guidance can only be conditional. I expect the MPC to avoid being overly explicit about its next move.- Better demand news is more than offset by the tightening in monetary conditions since August, in my view. Inflation forecasts may be trimmed far enough to be marginally below target, which would discourage extending hawkish market moves.
- Expectations for excess demand building still mean forecasts are ultimately hawkish, assuming a smooth Brexit and Sterling stability. Although I still forecast the next BoE hike in Feb-19, I expect unanimous votes for no change this month.
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