One Vote For A Hike?
Investors are unconvinced that circumstances will allow the BoE to raise rates and are pricing in only a 50-50 chance of a rate hike this year.
They will be watching for signals the BoE sends at 1200 GMT alongside its new economic growth and inflation forecasts and interest rate decision.
In November, the BoE said it expected inflation would remain just above its 2 percent target over the next two years, suggesting it thought investors were slightly underestimating how much it would raise interest rates over the period.
It also said it expected Britain’s economy would grow by 1.7 percent a year in 2019, 2020 and 2021, a forecast it might trim, given the signs of a global slowdown since then.
However, the BoE will also factor into its forecasts the impact on Britain’s economy of finance minister Philip Hammond’s decision late last year to relax his grip on public spending.
With wages now growing at their fastest pace in a decade, a few economists expect a lone vote for a rate hike from one of the MPC’s nine members.
That, plus the possibility of the BoE turning more pessimistic about the inflationary “speed limit” of Britain’s low-productivity economy, would send a hawkish signal even as other central banks turn more dovish.
If Britain leaves the EU without a deal, the BoE has said it might raise rates due to the inflationary impact of a likely slump in the value of the pound, although most economists think it would cut them to cushion the blow to the economy.