BoE Recognized Economy Lost Momentum - BBH
According to analysts from Brown Brother Harriman (BBH), the Bank of England
(BoE), recognized today that the economy has lost some momentum and that
uncertainty about the Brexit referendum may already by taking an
economic toll.
Key Quotes:
“No one can
feign surprise that the Bank of England kept policy steady. Nor was the
9-0 vote truly surprising, though there had been some speculation that
of a couple of dovish dissents.”
“The BOE recognized what many in
the market have already accepted; namely that the economy has lost some
momentum. Growth for Q1 is estimated at 0.4%, which represents a some
moderation.”
“The BOE suggests that the uncertainty about the
referendum may already be taking an economic toll. Whether the minutes
reflect the actual discussion or is used as a communication device, the
risk of Brexit is of greater concern. Surely this is because of the
potential economic risks posed by a Brexit decision.”
“Surveys
suggest economists mostly anticipate the first BOE hike in Q1 2017. The
markets don't appear to be pricing in the first hike until late-2017.
Our view is conditional on the outcome of the referendum. Some polls
suggest the outcome has tightened while the events market PredictIt
shows a 38% chance of Bexit, which is largely flat in recent weeks.”
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