Given Thursday’s decision falls outside of one the MPC’s quarterly “Super Thursday” meetings, in which they publish their Inflation Report outlining their views on the economy, it is unlikely there will be any change in monetary policy this week. The next “Super Thursday” meeting is in August.
Nevertheless the case for a rate rise currently appears weak. Recent production data has been soft – particularly in the manufacturing sector – while PMIs have also come down from the lofty heights recorded in the back end of 2017. This, combined with slowing growth in Europe has all added to the feeling that momentum in the economy is beginning to ease, a belief that was backed up in our own 2018q2 Manufacturing Outlook report. And with inflation expected to continue its overall downward trend to the 2% mark (despite the impact of rising oil prices), it is hard to see how the Bank could currently justify a rate rise.
As with any MPC decision however, the outcome must be data driven, and we will be keeping a close eye on how the data evolves over the coming months.