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BoE first move could come next week - BBH Matías Salord

According to analysts from Brown Brother Harriman, the Bank of England could not wait for August and start a new easing phase next week.Key Quotes:“Investors are debating over whether the Bank of England will ease policy at the July 14 MPC meeting or wait until August Quarterly Inflation Report, when new post-Brexit forecasts will be ready.  There are many dimensions to monetary policy, and the first move could come next week.”“Of the various parts of the UK body politic, the Bank of England appears to be the most prepared for Brexit.  It had been very clear in its assessment of the economic and monetary consequences.  What was once a risk scenario will likely become its base case.  New forecasts might be helpful, but not essential at this juncture.  Preemptive action need not await the fine tuning its assessment to a tenth of a decimal point.”“Carney suggested there may be scope to cut rates, but investors expect the BOE to stop shy of negative interest rates. This is an experiment by primarily the ECB and the BOJ, and the preliminary results are not particularly encouraging. Cutting the base rate in half (to 25 bp) may be the most the BOE is prepared to do on the price of money, but it is also expected to do more with the quantity of money. This entails launching another round of gilt purchases. A GBP50 bln three-month program may be the in the cards.”   



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