BoE’s MPC likely to vote unanimously to keep policy unchanged

BoE’s recent Inflation Report meeting had given the key opportunity every quarter to update its macro forecasts and also its policy message. This was a very dovish message. The projections are conditioned on the market OIS curve that even builds in a risk of lowering rate in the coming year. The MPC highlights that this curve should not be taken as its planned rate path. However, if the MPC has a different opinion of the expected path, then it should forecast a considerable overshoot of inflation target at the two-year horizon.

The MPC does not intend to lower rates, but it is definitely seeing additional risks on the downside to the prospect than it did a few months ago. That said, the increased concerns regarding a new global financial shock in January and February appeared to have alleviated slightly. The MPC is expected to comment on this during its meeting tomorrow. The MPC is expected to keep its policy on hold. It is likely to vote unanimously to keep rates and QE unchanged.