DWS: Too early for policy change at Bank of England

Please find below a comment by Katrin Löhken, economist United Kingdom at DWS , ahead of the BoE meeting:

Outlook for the Bank of England's monetary policy decision - too early for changes "The March meeting of the Bank of England (BoE) is likely to be unspectacular. It is still too early for a Bank Rate cut, and new inflation and growth forecasts, which could signal a fundamental shift in its monetary policy assessment, are not on the agenda yet. Instead, the BoE is likely to intensively discuss its assessment of risks of persistently high inflation. Important indicators such as wage momentum and services price inflation are trending down, which the BoE should welcome.

However, the levels are still uncomfortably high (and higher than e.g. in the euro area or the U.S.). Moreover, there are increasing signs that the economy is now stabilizing again after the shallow recession, which could potentially counteract the central bank's consolidation efforts. However, we expect the recovery to be only moderate, which should allow for a first interest rate cut in late spring or early summer. Data dependency will remain high, with a focus on wages and services prices. The BoE should also emphasize that it will still remain restrictive even after a first cut."