Bank of America on what to expect from the Bank of England on Thursday 05 May 2022
- The near-term policy outlook is not about weak data or possible easing-off the pace of hikes because there might be a technical recession. The Bank of England (BoE) simply needs to reinforce credibility, in our view, meaning we expect it to keep hiking until unemployment rises and inflation slows. Starting active quantitative tightening (QT) early might be one tool to strengthen the message that the BoE will bring inflation back to target
- We expect the BoE to hike 25bp this week with an 8-1 vote in favour, with one dissenter preferringa50bp hike. We look for the BoE to signal that it will begin active QT in the summer-initially at £5bn a month rising to £9bn in November-or at least provide details of how it would do active QT and at what pace. We continue to look for three more 25bp rate hikes (June, August and November) after this week's meeting
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Bank of England Monetary Policy statement due at 1100 GMT
- Governor Bailey speaks at 1130 GMT
