Bank of America Global Research discusses its expectations for tomorrow's BoE policy meeting.
"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," BofA notes.
"We expect the BoE to hike 25bp this week with an 8-1 vote in favour, with one dissenter preferring a 50bp 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," BofA adds.