BoE Preview: Expect rate cut by 25bps and launch of £50bn of QE - TDS

Research Team at TDS, expects the Bank of England to cut Bank Rate by 25bps to 0.25% and launch £50bn of QE, alongside measures aimed to limit downside risks of lower interest rates to bank profitability (such as a cheaper FLS).

Key Quotes

“The vote is likely to be 8-1 in favour of easing, with a dissent or two coming from those wanting to wait to see more data before acting.

Market consensus is also for a 25bps cut in Bank Rate (and this is fully priced into rates markets), but for QE, the call is split. The median is for no additional asset purchases, but 21 of 44 forecasters are calling for at least some QE.

Uncertainty around the exact mix of policy measures remains high. While we look for a dovish outcome, we also see 45% chance of the BoE disappointing our forecast in some way, and only a 10% chance that it eases more, so the risks are quite skewed.”