State Street Comments on Bank of England Monetary Policy Decision

In reaction to today’s Bank of England (BoE) Monetary Policy Committee (MPC) meeting, Michael Metcalfe, global head of macro strategy at State Street Global Markets; and Sophia Ferguson, senior portfolio manager for active fixed income and currency at State Street Global Advisors, Antoine Lesné, head of EMEA strategy and research for SPDR ETFs, offer their views.

Metcalfe comments, “With the potential economic shock of a no Brexit deal still in the balance, it is no surprise the MPC is sticking to its script that future rate increases will be gradual and limited. Baring a significant data surprise this rhetoric is unlikely to change until the December meeting, by which time it should, in theory, be clearer which way the Brexit deal scales are tipping.”

Lesné “As expected the MPC unanimously voted to kept rates on hold. Despite the pick-up in July GDP and a pause in inflation’s move lower, we don’t foresee another rate hike any time soon. Most likely the committee will stand pat until next year when the impact of Brexit negotiations is clearer.”

Ferguson comments, “Brexit remains a key risk for the economic outlook and the MPC’s forward guidance in the near-term remains conditional on the outcome of ongoing negotiations. While recent wage and growth data reinforce the BOE’s forecasts, it remains unclear whether improvements in the economic fundamentals are related to transitory effects or will continue at pace once summertime activity subsides.”