BoE: Headlines likely to pass without significant market reaction

Next week, the Federal Reserve and the Bank of England (BoE) they will have their monetary policy meetings. Analysts Rabobank they don’t expect any change from the BoE. They forecast that CPI inflation will peak at 2.5% (y / y) in early 2022, before slowing down.

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UK inflation figures are on a bumpy road. We expect the CPI to rise above 2% year-on-year by the end of 2021. In large part, the increase is a mirror image of last year’s decline. “

“The Bank of England announced a slight slowdown in its purchases in May, creating a trajectory towards its end-of-year target of 875 billion euros. The central bank did everything possible to clarify that “this is an operational decision that should not be interpreted as a change in monetary policy stance, even when the economic and inflation outlook improved. The increase in inflation was explained as a rather transitory matter. “

“Market expectations for the June meeting are subdued and it seems likely that the headlines will pass without a significant market reaction. The decision to keep the Bank’s rate at 0.10% seems like a done deal, and it is highly unlikely that we will see further changes in the pace of security purchases. “

“In May, the MPC agreed to set this rate at £ 3.4 billion per week until the August meeting, and market conditions have neither improved nor deteriorated significantly since then. But if the markets remain calm over the course of June and July, we will see another slowdown in the pace of these purchases at the August meeting as the MPC continues on its planning trajectory and attempts to create a soft landing at the end of the year. “