Investing.com – The Bank of England (BoE) was widely expected to make no changes to its monetary policy decision later on Thursday, but investors will eye the voting amid expectations for growth forecasts to be reduced and some calls for the U.K.’s central bank to lower interest rates.
Consensus forecast all nine members of the BoE’s Monetary Policy Committee (MPC) to agree to keep interest rates unchanged at the current record of low of 0.5% where it had been on hold since March 2009.
Yet, the MPC will also be releasing its latest quarterly forecasts alongside the decision at 11:00AM GMT, or 7:00AM ET, and some have postured that at least one policymaker could break from the unanimous decision for the first time since January and vote for a rate cut.
Oxford Economics consultant Martin Beck pointed to the weak activity surveys in April as a sign of a possible slowdown in second quarter growth from an already tepid advance in the first three months of the year.
“One thing that is clear is that the possibility of a cut in interest rates is looking ever less outlandish,” Beck said.
Former MPC member Danny Blanchflower was quick to advise the current BoE policymakers that they should embark on more easing.
“I would be voting for a 50 basis point cut tomorrow,” Blanchflower said in a Tweet on Wednesday pointing to the prior day’s data that showed manufacturing production had entered a recession, along with the recent series of weak purchasing managers’ indices in manufacturing, services and construction, and uncertainty over the U.K.’s June 23 referendum on membership in the European Union and the danger of a victory for a vote to leave, known as Brexit.
Bank of America Merrill Lynch also predicted that one member of the MPC, specifically Gertjan Vlieghe, would dissent.
These experts forecast that the BoE will lower its 2016 growth estimate to 1.8% from the prior 2.2% and reduce the projection for next year to 2.2% from the previous 2.3%.
Next rate move still expected to be an increase
In any case, a Reuter’s poll of economists suggested that the next move will still be a hike though it was not expected until early next year.
The consensus of experts said that the initial hike would be 25 basis points followed by an identical increase in the third quarter of 2017.
Financial markets themselves were not pricing in a hike until 2019.
The inflation report was unlikely to put any pressure on the BoE to raise rates as March’s increase settled at 0.5%, which, while being a 15-month high, was still far below the 2% target.
Carney in focus with stance on Brexit risk
Most experts expected the major focus to be on BoE governor Mark Carney who will give a press conference at 11:30AM GMT or 7:30AM ET.
Carney repeated just last week that the EU referendum was the biggest risk facing the British economy.
“In the very short term the economy appears to be slowing, probably related to issues around the referendum," he told the Stockport Express in an interview last Thursday.
Carney has been accused by many of overstepping his mandate and stepping into the political arena with similar comments, but has repeatedly claimed the BoE is responsible for identifying and evaluating possible risks to maintain price stability.
In any case, Carney’s opinion was shared by the overwhelming majority of economists surveyed by Reuters who coupled a Brexit with global economic uncertainty as the two biggest risks to growth.
While waiting for the BoE events scheduled on Thursday, GBP/USD slipped 0.09% to 1.4434.