LIVE MARKETS-Potential for "one of the more consequential BoE meetings in recent memory"

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POTENTIAL FOR "ONE OF THE MORE CONSEQUENTIAL BOE MEETINGS IN RECENT MEMORY"

The Bank of England meeting next week could be an interesting one.

After the Fed and ECB did just what markets expected them to do - cut and hold rates respectively - BoE is bringing some mystery to the table.

While markets are pricing a 73% chance that the central bank will hold rates at 4% when it meets next Thursday, big banks this week have said they instead expect a cut.

Barclays said the cut next week is underpriced. They expect the MPC to cut Bank Rate by 25 basis point to 3.75%.

"Data flow since September supports a cut, in our view, given the MPC's previous focus on "being responsive" to an "accumulation of evidence," they said.

Goldman Sachs said on Tuesday it now also expects the BoE to trim rates by 25 bps, after last week's softer-than-expected inflation data and signs of labour market strain.

But if the nine member Monetary Policy Committee do vote to ease policy, it'll be tight.

Nomura, which is also expecting a cut, said "there is probably only one voting configuration (5-4) that can deliver it,".

"Swing voters Bailey, Breeden and Ramsden will likely be needed to vote for a cut to get it over the line," they add.

Danske Bank also joined the gang, saying however "it is a close call."

"If we are right, we expect GBP to weaken, and UK yields to drop on announcement," they add.

Not everyone agrees though.

Deutsche Bank, BofA, UBS and SEB expect the BoE to keep the policy rate unchanged. So does Investec, at least for now.

"Come December, however, if we receive further promising news on inflation, and a big fiscal tightening in the 26 November Budget, then a further 25bp cut could be in play".

All things considered, as put by IG strategist Chris Beauchamp "next week's decision is genuinely uncertain, making it one of the more consequential BoE meetings in recent memory".

(Joice Alves)

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