BoE is going to cut at its next meeting – Danske Bank

Danske Bank analysts note that as per expectations, a majority of the policymakers at the Bank of England voted to keep the Bank Rate unchanged at 0.75% while two dissented and voted in favour of a cut.

Key Quotes

“The Bank of England repeated that it thinks GDP growth will 'pick up from current below-potential rates, supported by the reduction of Brexit-related uncertainties, an easing of fiscal policy and a modest recovery in global growth'.”

“While we agree we are about to see a modest recovery in global growth, we think UK growth will remain subdued for domestic reasons. Boris Johnson will ease fiscal policy but due to the fiscal policy lag, it takes time before we see an impact on actual growth. We also think that it is too early to say Brexit-related uncertainties are diminishing.”

“With CPI inflation below the 2% target and nominal wage growth having peaked, nothing on the price pressure side suggests the Bank of England should worry too much about easing.”

“We stick to our call that the Bank of England is going to cut at its next meeting on Thursday 30 January 2020.”

“Looking further ahead, there could be another cut during the second half of the year, although our base case right now is that the Bank of England will only cut once.”