Synopsis:
Danske expects the Bank of England to leave rates unchanged at 4.50% during its March 20 meeting, with a likely 6-3 vote split—Dhingra, Taylor, and Mann expected to vote for a cut. With no updated projections or press conference, the BoE is expected to stick to its previous guidance, emphasizing a gradual and careful approach to easing amid fiscal policy uncertainty and trade tensions.
Key Points:
1️⃣ BoE Expected to Hold at 4.50%, Likely 6-3 Vote Split 🏦
- Majority (6) to vote for unchanged rates, while Dhingra, Taylor, and Mann may vote for a cut.
- No new economic projections or press conference this time.
2️⃣ BoE to Maintain Cautious Guidance 🔍
- Likely to reiterate that monetary policy should be eased gradually and carefully.
- Domestic fiscal policy and trade tensions add to uncertainty, reducing the urgency to shift stance.
3️⃣ UK Growth Outlook Remains Weak 📉
- Economy grew 0.1% q/q in Q4 2024, slightly better than BoE projections.
- However, PMI data and January GDP signal stagnation, increasing downside risks.
4️⃣ Labour Market Loosening, But Wage Growth Still Elevated 📊
- Private sector wage growth (6.2%) remains high, though slightly below BoE’s 6.3% forecast.
- Inflation slightly above expectations, but services inflation continues easing.
- The April increase in employers' national insurance contributions could impact employment.
Conclusion:
Danske expects the BoE to remain on hold at 4.50%, with no urgency to shift guidance given fiscal and trade uncertainty, sticky wage pressures, and muted growth. The labour market is softening gradually, but persistent price pressures suggest the BoE will stick to a cautious approach for now.
