Bank of England meets today, Thursday, September 19, 2024:
- 1100 GMT is 0700 US Eastern time
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The below is the eFX summary of a note via Bank of America on the Bank of England and GBP
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Synopsis: BofA anticipates that the Bank of England (BoE) will maintain the Bank Rate at 5.0% during its upcoming meeting, with potential for a more dovish voting pattern.
Key Points:
1. Rate Decision: • BofA expects a 7-2 vote to keep the Bank Rate unchanged at 5.0%, with risks leaning towards a more dovish 6-3 outcome.
2. Guidance and Approach: • The BoE is likely to reiterate its meeting-by-meeting approach to monetary policy, maintaining current guidance.
3. Quantitative Tightening (QT): • An announcement regarding the Gilt stock reduction target, projected at £100bn for the upcoming year, is anticipated. The Gilt sales schedule for 4Q24 will also be outlined.
4. Market Implications: • The decisions on Gilt supply will impact debt definition, Gilt liquidity, and the relative scarcity of low coupon Gilts.
5. GBP Outlook: • The GBP is benefiting from expectations of higher for longer rates and a structural reset post-election. Despite positioning risks associated with a closer voting pattern, BofA believes the GBP is well-positioned to handle cyclical risks.
Conclusion: BofA's outlook suggests a stable path for the BoE, with the GBP likely to strengthen amidst ongoing high interest rate expectations and strategic monetary policy adjustments.