BoE continues to face a challenging balancing act - Westpac

According to analysts at Westpac, the BoE continues to face a challenging balancing act as on one hand, spare capacity is being eroded and the earlier drop in sterling means inflation will linger at high levels for some time and on the other hand, growth is sluggish and the impact of Brexit is still a significant downside risk for the economy.

Key Quotes

“Balancing these factors, we expect that the BoE will keep the Bank Rate on hold at its upcoming meeting.”

“The bigger question is what the BoE does in terms of forward guidance. In August, the BoE’s policy statement had a mild tightening bias; we expect that this will be maintained in September. However, there is some risk of a more hawkish tilt.”