BoE expected to keep rates table until February 2016 – Rabobank

FXStreet (Barcelona) - The Rabobank Team expects BoE to keep the policy rate and asset purchase target stable in today’s policy decision, and maintain stable rates until later February next year.

Key Quotes

“Today’s Bank of England decision is expected to keep the policy rate and asset purchase target unchanged.”

“By dropping to zero in February the UK CPI inflation rate immediately sparked a discussion as to whether the BoE could cut rates again. Even though CPI y/y inflation could fall into negative territory at some point over the coming months, such a move should be temporary.”

“The Bank has stated that long-term Inflation expectations have remained stable and since there is little sign that the UK consumer is adopting a deflationary mindset we expect that the next policy move from the BoE will be a hike.”

“That said, although we have been calling for no change in BoE policy until February 2016, the risk that UK CPI stays low for longer implies that steady rates could be in place until later next year.”

“We will be evaluating our BoE forecast in the coming weeks dependent on the tone of forthcoming data releases.”