This week sees the BoE’s third Super Thursday for this year, involving the simultaneous release of the interest rate decision, minutes of the meeting and updated economic forecasts. The central bank kept monetary policy on hold in July, signalling policymakers were willing to wait for more information before deciding whether - or when - to ease monetary policy to mitigate the potential negative economic impact of the referendum.
The key question is whether the BoE now considers it has enough information. While the past month has seen the release of a number of surveys conducted since the referendum, including ours, there’s still a lack of official data. Yet a significant change in the BoE’s forecasts could be enough to spur policymakers into action.
If the BoE does act, the most likely changes would involve cutting the main Bank rate from 0.5% to historic lows of 0.25% or to just above 0%, and/or restarting quantitative easing program by increasing its asset program beyond £375 billion.
A closer look at the PMIs
Also this week, we get the final estimates of the manufacturing and services PMIs for July. The flash PMIs suggested that the uncertainty following the EU referendum vote had hit the UK economy harder than other surveys have indicated. We’ll be looking at whether the PMIs are revised, and the extra information on output and new orders, to get a better feel for how manufacturing and services are faring.
This week we’ll be blogging the BoE’s decision and a roundup of forward-looking indicators including the PMIs and consumer confidence.