Bank of England: what to expect?
The Bank of England will announce its policy decision today at 12:00 GMT. Monetary policy is widely expected to remain unchanged, but many economists expect the overall BoE tone to become more optimistic.
On the next Wednesday (Nov. 13) the BoE will release its November quarterly inflation report, which would have served as a basis to the today’s monetary policy decision. Given the recent positive economic developments, the policymakers are likely to move the expectations of reaching a 7%-unemployment threshold forward from to Q2 of 2016 to Q4 of 2015. Let us recall that in August the BoE announced a forward guidance strategy, saying the interest rates won’t be raised from a record low until UK unemployment rate falls below 7 %. The new forecasts will be released as a part of the inflation Report, but the first hints may be given today.
Most analysts also expect the November forecasts to show another favorable set of revisions – stronger GDP growth and weaker CPI inflation. “That continues the trend since the spring: between the February and August Inflation Reports, the BoE revised up its cumulative GDP growth forecasts for 2013-2015 by around 2pps”, Bank of America economists say.