BoE: An air of caution - ING

James Smith, developed markets economist at ING, explains that the BoE unanimously opted to keep rates unchanged at its December meeting while an increased air of caution was evident throughout the latest statement.

Key Quotes

“Most notably, the Bank noted that Brexit uncertainty has 'intensified considerably,' and as a result of this and softer global growth, now expects momentum to slow further during both this and the next quarter.”

“The core message from the Bank of England seems to be unchanged. Policymakers still see inflationary pressures building as wage growth rises, and we get the sense policymakers still have a mild preference to tighten policy again sooner than later if they can.”

“This implies that current market expectations (no rate hike until May 2020) could prove too pessimistic, although of course what happens next still relies almost solely on Brexit.”