Deutsche Bank says May is too early for the BOE to talk about tapering
The firm says that any BOE tapering talk in May will be a close call but their view is that policymakers are likely to wait until June before starting the tapering process.
Adding that policymakers would like more assurance of rising inflation and spare capacity before taking the leap but given that "the bar is high for any shift in policy at this stage", expect a more hawkish tone by the BOE in May.
Just be mindful that the BOE meets next week on 6 May and while UK economic activity is starting to reflect pent-up demand, it could be too soon for the BOE to pull the trigger - but not entirely out of the picture.
While Deutsche sees the next BOE move in June, Morgan Stanley is one that expects the BOE to start tapering in August instead. However, they still expect the central bank to convey a fairly hawkish message at the upcoming May meeting.
That said, Morgan Stanley says that it is a fine line to be walking on:
"Our impression from client conversations and market commentary is that most investors expect the tapering to be announced in August, though some in the markets expect this to come sooner, at the May or June meeting."
