CORRECTED: MNI BOE WATCH: On Hold And Splits Set To Continue
The BOE is expected to continue to leave policy on hold in June with splits persisting.
(Corrects second-last paragraph to say that meeting will be last for Ben Broadbent, not for Dave Ramsden)
The Bank of England is expected to leave Bank Rate unchanged at 5.25% on Thursday at its June meeting, though May data out Wednesday could show it hitting, or coming very close to, its 2.0% inflation target.
Analysts are united in the expectation that policy will be left unchanged and the likelihood is that there will be a repeat of a seven-to-two vote, with independent Monetary Policy Committee member Swati Dhingra and Deputy Governor Dave Ramsden again voting for a 25-basis-point cut. With the next forecast round in August and the Bank having previously predicted that inflation will edge up again after reaching the target, Wednesday's inflation print should not tilt the scales either way.
The debate on the MPC instead has centred on inflation persistence, with splits over how to measure it and over which measures are the most reliable predictors. Ramsden has endorsed the view of former MPC member Gertjan Vlieghe that services inflation is not a reliable guide to inflation persistence while Megan Greene has placed weight on an ex-energy measure and Dhingra has emphasised the importance of shifts in producer price inflation and consumer prices. (See MNI POLICY: BOE's New Dove Ramsden Often Leading Indicator)
MINUTES
The minutes are again likely to reflect the fractures within the majority no-change camp by stating something similar to May's line that "There was a range of views among these members regarding the risks around ...(inflation) persistence ...(and) the extent of the evidence that was likely to be needed to warrant a change in Bank Rate."
With no press conference and with the MPC members in purdah due to the election campaign, making them unavailable for post meeting speeches or interviews, the messaging this month looks likely be pretty thin gruel. The June meeting will be Deputy Governor Ben Broadbent's last, but he too will be unable to do any exit interview illuminating the policy debate.
The policy guidance, with its emphasis on data dependence and the need to "monitor closely indications of persistent inflationary pressures" is also expected to be unchanged.