BoE to focus on strengthening domestic economy

The U.K  PMI continued its fall in August, inflation remains stubbornly close to zero percent, industrial production is limping and the trade deficit is expanding. In addition there are the external developments surrounding China and the Emerging Markets. The resulting uncertainty and increased volatility on the markets will cause some MPC members to wait and see as well as considering the strength of the domestic economy as a kind of buffer against unfavourable external impacts. 

"Moreover the BoE cannot completely ignore the Fed's and ECB's approach: the Fed is likely to wait until December before hiking its key rate and the ECB signalled that in the foreseeable future its monetary policy will become even more expansionary. If the BoE now seems like a central bank in favour of hiking interest rates soon it risks the appreciation of the pound which in return is going to put pressure on the inflation rate and make it more difficult to reach the inflation target", says Commerzbank. 

So everything all told the BoE is likely to stick to its approach and underline the strength of the domestic economy while also sounding concerned about external developments. Therefore, Ian McCafferty, a MPC member of BoE, is unlikely to find any supporters for vote in favour of a rate hike.