HSBC shares its predictions for the forthcoming Bank of England (BoE) meeting, suggesting that it's highly likely the bank will maintain the status quo regarding its policy.
Expected Vote Outcome: HSBC's economists project a 6-3 vote favoring no change in the policy. They anticipate Catherine Mann, Jonathan Haskel, and Megan Greene to vote in support of a 25bp rate increase.
Market Consensus: The broader market expectation aligns with a policy standstill. Out of the 49 economists surveyed by Bloomberg, only two anticipate a rate hike.
Potential for Hawkish Surprise: Given the current pricing, there might be room for a hawkish surprise. However, the odds for another rate hike in this cycle stand at just 25%.
BoE's Likely Stance: HSBC expects that while the BoE will keep possibilities open for a future rate hike, it will not strongly indicate its likelihood. Although inflation and wage growth remain high, they are on a downward trajectory.
Impact on GBP: Should the BoE hint at a more aggressive approach to curb inflation, the pound sterling (GBP) might face challenges. Concerns about stagflation, combined with a complex growth and inflation balance, persist. Any suggestion that the BoE sees a need for further tightening might adversely affect the currency.
Comparison to Previous Meetings: HSBC anticipates the BoE's tone to mirror that of its September meeting, albeit with slight adjustments to the forecasts introduced in August.
HSBC foresees the BoE continuing its current policy in the upcoming November meeting. Any major deviations from the expected narrative, especially a hawkish tilt, could have implications for the GBP. However, the bank's stance is likely to be consistent with its previous communications, emphasizing steady policy management.