MPC to introduce stronger forward guidance

The main event this month is likely to be the announcement of formal forward guidance. We expect the Monetary Policy Committee (MPC) to commit to keep official interest rates low until an unemployment threshold is breached. Any commitment will be announced alongside the Inflation Report on Wednesday 7th August, so the meeting itself on 1st August could pass without event. That said, there is an outside chance of a resumption of QE or the start of some other policy action (for example, on bank lending).