There continues to be focus on whether the.......>

UK: There continues to be focus on whether the Bank of England will lower rates

into negative territory and the first sell-side banks to formally forecast

negative rates emerged last week. However, last week neither gilts nor short

sterling futures reached the highs seen in the prior week. It seems that no MPC

member wants to rule out negative rates but they do not want to push the market

towards aggressive pricing either. QE still remains the favoured policy response

at least in the short-term with the potential for another 10bp cut to zero.

Consensus continues to build in favour of some kind of funding for banks at a

negative rate, but not explicitly the headline Bank Rate turning negative. The

most obvious avenue for this would be through indexed the TFS at a rate below

the Bank Rate, similar to how TLTROs in the Eurozone can be indexed below the

deposit rate.

- Last week saw no top tier data released and the highlight this week will be

the final readings of the PMIs which are expected to pick up a little relative

to the flash. There are also no MPC members scheduled to speak this week.

- For more see the MNI Gilt Week Ahead, sent via email at 6:30BST.