Economics Insights:BoE Inflation Report preview (12May)

At noon on 12 May, the BoE will announce its latest monetary policy decision and publish both the minutes of the monthly meeting and the quarterly Inflation Report. There are then slight gaps before the press conference (12:30pm) and economist briefing (2:30pm) begin. With the UK’s referendum on its EU membership being held several weeks after this meeting, there is considerable uncertainty discouraging any member voting for a hawkish change in policy. As news on activity has been to the downside (Figure 1), it is easier for a member to justify a dovish progression in their view. However, the Brexit risk may be distorting some data, which was why the MPC said it would be less responsive than normal to short-term developments. Markets have nonetheless already moved to price in a dovish policy response, with the yield curve much lower and flatter again than in February (Figure 2). The short-term inflationary news is being looked through now that it lies to the upside, demonstrating the perceived asymmetry of policymakers.