BOE Review - Feb 2021: Nothing Dovish Here

• The Bank of England left rates on hold and the stock of QE unchanged with unanimous votes. This was largely expected although two of the 22 analyst previews we had read were looking for a 10bp cut to 0% while a few other analysts expected one or two external MPC members to dissent.
• We wouldn't go so far as to say this was a hawkish meeting, but there was certainly nothing dovish here. Furthermore, it wasn't so much the MPC's views which drove much of the reaction, rather the PRA's guidance on when negative rates can be implemented without increasing financial stability risks.
• The Bank's growth forecasts were optimistic to say the least, assuming that the vaccination strategy will allow a fairly swift rebound in growth this year with an unprecedented rebound in demand, partly helped by releasing pent-up demand.
• The Bank announced a new review into the exit strategy. The MNI Markets team expects that the Bank will conclude at the very least that the first step of tightening will be to stop reinvesting proceeds from gilts that mature. This could potentially happen even before Bank Rate is increased at all.

MNI BoE Review - Feb21.pdf