BOE QIR Preview – Deutsche Bank

Analysts at Deutsche Bank publish a brief preview on the BOE Quarterly Inflation Report (QIR) due to be released this Thursday, in accompaniment of the BOE’s interest rate decision and policy minutes.

Key Points:

Looking to the February Inflation Report, therefore, the Bank will need to make some acknowledgement of the recent strength of data but at the same time is likely to seek to remain behind the curve given the MPC’s continued concern over the impact of Brexit uncertainty on growth.

In this regard, allowing Gilt QE to expire following the February re-investments, in line with expectations, will enable to MPC to demonstrate it is indeed no longer in easing mode.

At the same time, a more vocal assessment of the potential to raise rates if growth remains robust is less likely at this stage with the MPC likely to prefer to wait until the May IR, when they will have further evidence of the potential impact of the triggering of Article 50 on the economy, before further shifting their neutral bias.

The Inflation Report will also see the MPC publish a revised market notice detailing the re-investment of the GBP 11.6bn proceeds reinvestment due from the 1.75 2017.

We anticipate the reinvestment will distributed over February, with the first buybacks taking place the week following the February IR.