Bank of England: Forecasts from seven major banks – Waiting for more data

The Bank of England (BoE) will announce its interest rate decision on Thursday, March 21 at 12:00 GMT, and as we get closer to release time, here are the expectations forecast by economists and researchers of seven large banks.

The BoE is expected to keep interest rates at 5.25% for the fifth time in a row. Investors will be looking for clues as to when the BoE will start cutting interest rates.

Rabobank

We forecast that the BoE will keep rates at 5.25%. We may see a three-way split in the vote again. Current guidance already suggests that the next move is likely to be a cut. We do not believe that the Monetary Policy Committee will give a clear clue on the timing of the cut at this meeting. The labor market gradually changes from a seller's market to a buyer's market. However, wage growth and services inflation remain incompatible with sustained inflation of 2%. We believe the BoE will lag behind the Fed and ECB, with the first rate cut coming in September. This is expected to happen well before core inflation is on track to reach 2%.

TDS

We expect the Monetary Policy Committee to leave its key guidance largely unchanged and keep the bank rate at 5.25% at this meeting, with a “wait and see” message. There is room to soften the language around core inflation, but little else should change.

Danske Bank

We expect the BoE to keep the bank interest rate unchanged at 5.25%. Overall, we expect the Monetary Policy Committee to repeat its previous communication based on a data-dependent approach. We expect a moderate reaction in EUR/GBP with risks tilted to the upside.

ING

We expect the BoE to reiterate its previous guidance that rates should remain sufficiently restrictive for an extended period. If this statement is softened, it would open the door to an imminent rate cut, something we doubt the Committee wants to do. The more interesting question is whether the two hawks who voted for a rate hike in February finally throw in the towel, although we wouldn't be surprised if at least one of them doesn't. At the same time, we don't expect Swati Dhingra, the lone dove, to join other members in voting for a rate cut this month. In our opinion, the first rate cut will occur in August, when the inflation data for the second quarter are known.

Wells Fargo

The technical recession and rising inflation are likely to prompt BoE policymakers to consider cutting rates in the coming months, although we expect the BoE to remain on hold this week. Disinflation in the UK has been gradual, which is likely to mean the BoE delivers rate cuts in the second quarter. At the moment, we believe that the BoE will implement its first cut at the June meeting. However, advancing disinflation and moderating activity raise at least the possibility that the BoE's easing could come sooner than expected. Not as soon as March, but the March meeting could indicate when policymakers are thinking about the timing of a shift toward easing monetary policy.

Citi

We expect the Monetary Policy Committee to hold rates this week, with the main movement coming in the vote split, where dissent is likely to narrow further.

SocGen

We hope the Monetary Policy Committee sticks to its message that it needs more evidence that disinflation is on track before it starts cutting rates. Recent statements by Committee members and the fact that the main wage data for April will be published after the May meeting have led us to delay our forecast for a first rate cut until June.