POV: The Bank's assumptions already see the.....>

BOE: POV: The Bank's assumptions already see the UK economy growing at an above

potential growth rate with the unemployment rate below NAIRU and if there was no

Brexit elephant in the room it is very likely that the UK would already be in

the midst of a hiking cycle. However Brexit cannot be ignored, leaving UK

monetary policy at the mercy of politics. With this in mind, tomorrow's MPC

meeting will not be as market moving as it otherwise would be. MNI PINCH shows

markets are pricing just under a 50/50 chance of a 25bp hike in 2019.

- We expect the main risks to be surrounding the Bank's estimation of the impact

of the global slowdown on domestic growth. If this is moved to a more prominent

place in the statement and growth forecasts were downgraded more than expected,

the market would likely further reduce the probability of a hike in 2019.

- Conversely, if the Bank sees fiscal policy more than offsetting the global

slowdown this would be a marginally hawkish risk. Labour market and wage data

have been positive recently and if the Bank divert attention away from Brexit

risks to concerns about wage growth, we could see a mildly hawkish market

reaction.