Bank of England likely to keep monetary policy on hold in September – Lloyds Bank

The Bank of England’s Monetary Policy Committee is set to meet next week for its latest policy decision. Also, updates for inflation and labor market conditions are set to be released next week. According to a Lloyds Bank research report, the MPC is likely to keep monetary policy on hold next Thursday. A 7-2 volte split is expected against an immediate rate hike, with only external members Ian McCafferty and Michael Saunders voting in favour, said Lloyds Bank.

There might be particular interest in the stance of new member Dave Ramsden and Silvana Tenreyro, who will be only her second meeting. However, both are likely to vote with the majority. During this meeting, there will not be an inflation report, forecast updates or press conference. But the minutes of the policy meeting would be published along with the decision. These would be examined closely for any signs that other members are close to voting for a hike.

External MPC member Gertjan Vlieghe is set to speak the day after the announcement. He has, so far, been amongst the most dovish members of the MPC.

“We expect CPI inflation (Tue) to have risen to 2.8 percent in August, from 2.6 percent, primarily reflecting the impact of higher energy prices”, stated Lloyds Bank.

The entire impact of sterling’s depreciation on inflation is yet to be seen and the recent future slide, if sustained, might indicate towards some more upside potential. But for the majority of the MPC the key metric is likely to be domestic inflation. This signifies that the labor market report would also generate considerable interest.

“We look for a further decline in the unemployment rate to 4.3% and some acceleration in wage growth, added Lloyds Bank.

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