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Barclays' view ahead of this week's MPC meeting

BOE
  • Barclays notes that "a split in votes is very likely" but sees "November as a more relevant time for decision-taking as data by then will likely support one camp or the other." At this meeting Barclays sees Haskel and Tenreyro "advocating the case for caution" with Haldane more optimistic.
  • Barclays expects the MPC to "generally underwhelm". However, it sees "some scope for a discussion regarding the feasibility of negative rates, the impact of Brexit negotiations (evidently no longer in line with an ambitious and deep relationship), an assessment of measures deployed so far (both monetary and fiscal) and the future sequencing of possible easing measures (rather than a discussion on balance sheet unwind)."
  • On effective lower bound: Note that August is the month where the BOE reviews its equilibrium interest rate estimate and hence there is scope for the ELB review to be published alongside. However, Barclays thinks that "chances are for the August MPR to disappoint in providing clarity regarding the Effective Lower Bound (ELB) and the possibility of sub-zero rates".
  • On QE: "August was flagged as a natural milestone in the reassessment of that view (currently £1.15bn per operation). That could come either explicitly in the MPC discussion, in a box in the MPR or subsequently in a market notice."
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